Positive Economy and Corporate Earnings
We think the odds of recession in the near term are very low. As such, we believe weakness should create buying opportunities. We are encouraged by the data, which suggests a supportive fundamental backdrop:
- Corporate earnings revisions have been positive.
- Credit markets are stable.
- The employment picture is strong.
- Real interest rates are subdued.
We are optimistic that compromise will result in a trade agreement, eventually. Until that happens, investors should expect volatility, as stock and credit markets will remain vulnerable to negative news flow. If global markets weaken, we believe this will apply more pressure on the US and China to make a deal.
We want to emphasize that we are focused on meeting the challenges facing our clients. Although uncertainty is high, we believe our investment strategies should fare very well over the right timeframe. However, the path from here is likely to be bumpy.
The key is finding the right balance between risk and reward and designing a portfolio that suits your goals and preferences.
Source: J.P. Morgan Asset Management, FactSet, Standard & Poor’s; as of 12/31/18.
Intra-year drops refer to the largest market drops from a peak to a trough during
each calendar year from 2009 to 2018; they are based on price index change only
and do not include dividends.
Even in Good Years, Drawdowns are Normal
Over the last 10 calendar years, intra-year drops in the S&P 500 averaged 13.2%, despite positive returns in 7 of these 10 years. This suggests that investors who can stay invested during times of volatility should benefit from equity markets.
Make Informed Financial Decisions
Before jumping to conclusions or attempting to make predictions about what the future may hold, analyzing your current financial situation can provide valuable perspective. We help clients remain disciplined through all periods, in order to capture the expected returns that markets offer.
We spend a great deal of time analyzing markets and balancing the risks and opportunities we identify in this analysis. We remain focused on navigating this challenging investment backdrop for our clients. If you have any questions or aren’t comfortable with your current financial situation, please give us a call to discuss your options.