"The market" reacts to large news stories - the scarier and more hyped by journalists - the greater the reaction. Short term speculators add to the overreactions. Did the value of my local Russell 2000 company really drop by 3% the last three weeks? Well, yes, the market did drop but not its real value, because that's what people pay for it now. Is that market value drop likely temporary? Yes.
How can you take advantage – you could rebalance – grab a little bit of the bonds 2% spike up profit, and grab some stocks that just became a little less costly – probably temporary. Rebalancing is great both short term and long term. Just know that “timing” the bonds short term peak and stocks short term trough is purely a guessing game. Also know that trading cost money, so do it wisely, making as few trades as possible focusing on the securities most up or down. Know that if the trend continues, you may want to rebalance a second time.
What are you looking at? The next image shows three bond funds Jan 9-30, tracking each other closely are 1) Total Global Bond Fund, 2) TIPS (treasury inflation protected securities) and 3) Corporate Bonds of intermediate credit and medium term length.
The second image shows three total stock funds Jan 9 to Jan 31. The one that dropped the most (so far -6.6%) is an emerging markets fund dominated by China since China represents about 30% of the total emerging market countries capitalization. The second worst is Developed Countries (-3.6%) not including USA. Finally the fund that dropped the least is a total USA stock fund (-2.6%). All three are highly diversified, representing about 12-13 thousand stocks globally across all three with no overlap, from microcap to large cap.