An Important Update
Dear TIAA Participant,
The recent volatility in financial markets is
top-of-mind for many investors, and we wanted to offer you our perspective on
these events.
Throughout our nearly 100-year history, we
have seen this type of market volatility many times before, with stock prices
falling in anticipation of higher interest rates. In the past, it has
not lasted long, and it has typically been a buying opportunity.
In our view, stock prices are falling as
markets adjust to a period of somewhat faster economic growth, somewhat higher
inflation and a somewhat more hawkish Fed. Those are late-cycle trends, and
late cycle has generally been good for stocks.
While inflation expectations have drifted up,
so have real interest rates. This equity market correction is less
about inflation fears and more about concerns that the Fed will tighten too
much or too soon. At this point, markets have priced in close to three
Federal Reserve rate hikes in 2018, and another in 2019. More
adjustment might be needed, but the bulk of it is behind us.
Ups and downs in the financial markets are
not unusual. We have tips for you to consider during times of market
volatility in a piece titled “What to
do – and what not to do – when markets get shaky.” Highlights
of the recommendations to help keep you on track toward your goals include:
Historically, regardless of the source of
volatility, markets have generally proved resilient over longer periods of
time. A TIAA advisor can evaluate whether a portfolio is built to
weather market storms – or if it needs shoring up so it can continue meeting
individual objectives.ii If you have any questions, please contact
your TIAA financial advisor. Thank you.
Sincerely,
TIAA
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