A Review Of The First Quarter 2018

Retirement, Income, Tax & Estate Planning.

A Review Of The First Quarter 2018

April 5, 2018 Investing Newsletter Retirement Planning 0

I know it hasn’t been fun and I know most of us have had our share of roller coaster rides over the years, but it feels like we’re on a ride again. The first quarter of 2018 saw a return to what we can consider “normal” levels of volatility, after a period of historic low volatility that lasted throughout 2017. In the first quarter of 2018, the Dow Jones Industrial Average has had 12 days with a move of 1% or more in either direction. We only had 10 throughout the entirety of 2017.

So why is this “new” volatility considered normal? Since 1998, there has been an average of 16 days each year where the Dow moves 1% or more in either direction. That breaks down to about four times per quarter. We have already had 12 days of that in Q1 alone and, if the rest of the year follows suit, we’ll see close to 50 days with notable ups or downs. Buckle your seat belts, it’s going to be a bumpy ride. 
Why the drastic difference between last year and this year? Much of last year’s news out of Washington was pro-growth: tax cuts and deregulation. This year, however, the headlines are full of tariffs and trade wars. Fears of inflation and rising interest rates are also having a negative effect on Wall Street.

Another anomaly: both the Dow and the Aggregate Bond Index were negative in the first quarter. Going back to 1976, there has never been a full calendar year with both negative stock and bond indexes. This trend is not likely to continue, but has had a negative impact on portfolios so far this year.

If all the ups and downs have you feeling queasy, you’re not alone. While you should know we (Kyle and I) are proactively keeping constant watch on everything that’s happening, also know that not everyone is experiencing the full brunt of the market roller coaster. Folks who have moved to include more protected funds in their portfolio mix will feel less pain when the market’s down. “Protected” here refers to products like fixed or fixed-indexed annuities or indexed universal life insurance, which offer built-in protections against market downside.
Do you have enough protected funds? Are the wild market swings keeping you up at night? A lot of folks coming through the door don’t actually know how exposed they really are, considering their old broker told them they were invested in low-risk funds. A lot of folks ARE their old broker.

If you’re having trouble sleeping, let’s look at your risk tolerance and whether you’re too exposed to the daily moves in the stock market. Even if we’re not managing your money, we can run your portfolio through a series of tools to see how exposed you are to risk and see if everything is on the up-and-up and get you that peace of mind. 

We’re here for you, just call 215-657-9200.