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Is It Safe?
January 2019
Round Trip
December 2018
Is It Safe?
The New Year is often a time for people to reflect and make resolutions. Some reflect and wish they would have sold their equities in September. Others make resolutions never to buy bitcoin or cannabis stocks again. The fourth quarter reminded everyone participating in the equity market that after many ups, there will be some downs and to enjoy the benefits of the ride you have to deal with both. Volatility, which has been low for so many years, reared its head high in 2018. Nearly all asset classes had negative returns through November and domestic and international stocks stayed that way. Bond investors saw rates drop and treasuries rally in December, helping generate slight positive returns for the year if they avoided long maturities and low credit quality.
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And then some. Most equity indexes are down for the year between five and ten percent. The stock market does not go in one direction, although some would be tempted to believe that is the case due to the almost decade-long bull market we have been experiencing. The S&P 500 has not had a negative year since 2008. Corrections also seem more painful when they happen in a short period of time; remember early February? When the stock market declines in more of a stair-step manner, investors have time to re-anchor their expectations based on a more gradual downward slope. Now that we have experienced a drop of almost 17% in the S&P 500 in less than a quarter, it is natural to ask, what has changed in twelve weeks?
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