Market Minute - April 10, 2018

by Scott Rosenquist, CFA

TECH, TARIFFS & TWITTER = VOLATILITY

Volatility has picked up this year after an extraordinarily calm 2017.  The sources of volatility are numerous ranging from potential regulations for technology companies regarding user data, tariffs on Chinese imports and possible retaliation, and uncertainty from President Trump’s twitter feed.

.  While much of this is still news and not policy yet, it causes a great deal of uncertainty which is now being reflected in the financial markets. The chart below from J.P. Morgan’s Guide to the Markets highlights this by displaying historical returns for the S&P 500 each year along with intra-year declines. 

 

Duration of the Barclays U.S. Aggregate.png

 

As you can see, in most years the market experiences a down turn at some point with the average intra-year drop of 13.8% over the past 38 years. Compared to last year’s drop of 3%, we’ve already seen a drop of 10% this year and it happened quickly, which added to investors’ uneasiness. 

Staying invested for the long term is key to meeting your long term financial goals.  To help with this, it is important to stay diversified which can help lower the volatility in your overall portfolio.  One potential way to diversify is having an allocation to assets in other markets such as developed international and emerging markets.  I’ll expand on that in my next post but in the meantime, if you have concerns about the recent volatility, please contact your Relationship Manager to discuss.

 

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendation for any individual. Although general strategies are revealed, this post is not intended nor does it reflect transactions within any one account. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. All data and information is gathered from accurate sources but is not warranted to be correct, complete or accurate. Investments carry risk of loss including loss of principal.  Past performance is never a guarantee of future results.

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