As we navigate the intricate pathways of investment, you may have observed the recent turbulence within global equity markets, resulting in a noticeable correction. Such fluctuations can naturally cause concern, and I wish to provide you with some context and reassurance during these times.

Understanding Market Corrections

Market corrections are an inherent aspect of the investment cycle. Following an extended period of robust returns spanning one and a half years, it is expected for markets to pause and recalibrate. Though periods of volatility may be unsettling, they frequently offer valuable opportunities for those with a long-term perspective.

Factors Behind the Recent Correction

The recent correction does not stem from a singular cause but rather from a confluence of factors:
1. **Crowded Investor Positioning**: Many investors have pursued similar strategies, such as shorting the Japanese yen against the US dollar or investing heavily in AI stocks. When these crowded positions are unwound, the market becomes susceptible to sharp movements.
2. **Bank of Japan's Rate Hike**: The unexpected rate hike last week led to a rapid unwinding of the yen "carry trade," a strategy involving borrowing in a currency with a low interest rate (the yen) and investing in higher-yielding assets. This set off a chain reaction across global markets, impacting other crowded positions.
3. **US Economic and Political Uncertainty**: Uncertainties surrounding the US election and recent weaknesses in US employment data prompted funds with shorter time horizons to adjust their positions, opting to take a pause during the summer.

**Maintaining Perspective**

It is crucial to maintain a broader perspective during such times. Before this correction, global equities had risen more than 13% by the end of July. Even after the recent correction, they remain nearly 10% higher. Significant gains have been driven by high-performing AI stocks, with the "Magnificent Seven" up as much as 51% this year. Thus, this correction can be viewed as a natural and healthy part of market dynamics.

**Opportunities Amidst Volatility**

The sage advice of Warren Buffett resonates deeply here: "Be fearful when others are greedy and greedy when others are fearful." While this wisdom is easier said than applied, it underscores that market downturns can present opportunities to deploy additional capital. For those who hesitated to invest due to high market levels, now may be an opportune moment to consider entering. Investing during a correction can lower your average entry price and enhance your long-term growth potential.

**Long-Term Strategy**

I must stress that we do not advocate attempting to time the market. Predicting the exact bottom is impossible, and such attempts often result in missed opportunities. History has shown that markets generally rebound, and those who remain invested are more likely to benefit from these recoveries.

In the coming days, I encourage you to reflect on your investment goals and consider whether adding to your investments aligns with your long-term strategy.