Global stock markets fell dramatically last week. Three big factors are breathing uncertainty into the markets:

  1. China may be growing at a lesser rate than stated by its government.
    China has seen a slow-down in its core engines for growth, manufacturing and exports. The Chinese market has stumbled significantly after a year-long boom and has seen large outflows. In an attempt to boost the economy the government devalued its currency a couple of weeks ago, which has created uncertainty and has pushed investors to believe that the Chinese economy may be growing slower than its government has previously stated. In fact, according to the Wall Street Journal, the Chinese economy is expected to grow at 7% in 2015, a growth rate that would represent its slowest growth in the past quarter century .
  2. Oil prices are at 6 1/2 year lows.
    Prices for Crude oil fell below $40 a barrel--last year a barrel of oil was around $100. An excess of global supply and a decrease in global demand has pushed oil prices lower and China's slowdown has weighed heavily on commodity prices. Many countries whose economies are based on metals, oils and agriculture have been negatively affected.
  3. Uncertainty surrounding the impending interest rate increase from the Federal Reserve.
    Although many investors felt a September rate increase was imminent, the Federal Reserve has been unclear on its plans to raise rates. The recent release of Fed Minutes has sent mixed signals and caused increased uncertainty in the U.S. markets.

Oil's 6 1/2 year low, China's slowing economy and uncertainty from the U.S. Federal Reserve has markets reeling.

When markets fall hard for a few days in a row a natural impulse is to do something, anything. Now is a great time to remind yourself of your long-term goals. If your goals have changed since your portfolio was built it may be time for a change. But, if your goals remain the same remind yourself that stocks are most useful for long-term goals.

Market volatility highlights the importance of having a diversified, long-term investment strategy.

Ethan Wade, Financial Advisor

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(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp. The author's opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).