Portfolio returns were good in the 1st Quarter of 2007 despite major market volatility that began in late February. After months of relatively calm and well-performing stock markets, we experienced three separate days of significant drops spanning a three-week period. CNBC as well as many cable news networks gave major coverage to these drops.
The market would eventually recover after each of these days and wound up ending the month of March just 2% lower than before the first daily drop. In flipping through numerous press clippings, I found an article from the Wall Street Journal titled “Stock Selloffs are Losing Shock Value.” This was absolutely true – each new day of a relatively big decline sparked less and less panic and more measured news coverage.