One-day corrections of 3% are always painful, especially so when investors have become so accustomed to low volatility after almost a decade-long bull market. We see the move as most likely a technical sell-off (famous last words) and believe it is probably too early to buy the dip.
“You only find out who is swimming naked when the tide goes out” (Warren Buffett, 2001). In bull markets, market risk is often the most important driver of performance. However, we should pay attention to bottom-up investors in both equity and credit markets as they can add value in spotting turning points and identifying areas where investors may find themselves overexposed.