Coming off years of strong investor confidence, volatility has become the name of the game. 2018 was a hard year for equity markets when, for the first time in almost a decade, we saw indices hit bear market territory. Stocks came roaring back just a quarter later, only to give way to large intraday fluctuations throughout markets as we head through the 2nd quarter of 2019. The losses are adding back up.
Trade War Impacts on Portfolios
Renewed trade tensions between the US and China continue to drag on the economy. These most recent events sit heavily on our minds as they take their toll on investor portfolios. The S&P 500 is down over 4% this month alone, with international and emerging markets taking an even greater brunt of the escalating trade war. However now, as before, is not the time to panic. While we may be tempted to think that things are “different” this time, that action must be taken, the evidence continues to show that value lies beyond the speculation of market influences.
Looking to the Future
Remember, we’re long-term investors in efficient, forward looking markets. At any given moment, the most likely outcome of any given event is reflected in current pricing. The ongoing trade wars, future elections, and partisan infighting are but the most recent market risks (of many) to present themselves. How these events will play out is anyone’s best guess, with each just as likely to end one way, as another. Attempting to predict which side the coin will land is a risky proposition, that all too often will end in mistakes and underperformance, especially over the long-term.
So, tune out the market noise and turn off the financial pundits. Remaining disciplined and committed to your investment strategy continues to be the most practical way investors can react when markets play rough.