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Here we go again!

Here we go again!

| May 13, 2019
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If you are paying attention to the news you probably already know that the U.S. is once again getting tough on trade with our largest trading partner, China.  And, if you are paying attention to your investment portfolio you have probably noticed that the "markets" do not like the tough talk on trade.  The headlines say we are back in a "Trade War" with China.  In reality, we were never really out of a trade war with China, but instead of negotiations being held in the background as they have been for the past few months they are back front and center with the U.S. implementing new tariffs on Chinese imports.

So, here we go again!  But, much like we discussed in the 4th quarter of 2018 when the markets were roiling during the same trade negotiations the issues seem much more political than they do fundamental.  And, from an investment point of view, I would much rather have political issues affecting markets than systemic fundamental issues which are harder to overcome.  Here are a few facts to consider at this point:

  1. The S&P 500 during the most recent market downturns is only 4.35% down from all time market highs.  And, in fact, the S&P 500 is still up roughly 12% for the year.  So, right now the market is simply giving up some gains instead of going into negative territory.
  2. There is now increased incentive to get a trade deal done, and we believe due to the current strength of the U.S. economy, China has a lot more to lose in a trade war.
  3. The investment market was already expensive and due for some sort of pull back.  Ebbs and flows are healthy and normal in the markets.
  4. As we've been saying since last year market volatility might be around for a while.  We are simply seeing a continuation of that volatility, which can be both negative and positive.
  5. We are watching this very closely for our client portfolios and will see how it all plays out.  But, right now we are focused on the opportunity to buy with cash as valuations become more attractive.

What are investors to do in periods of investment volatility like this?  Not to sound like a broken record, but stay the course.  Hopefully, you have been honest with yourself and your ability to assume investment risk and have settled on a long-term risk objective with which you are comfortable both in the good times and the bad.  If you are questioning your risk objective, now may be a very good time to discuss this with us - not necessarily to make a change but to understand why your risk objective is what it is.

We are in a period of short-term pain.  Do not let the fear of pain affect the long-term prospects of gain in your investments.  

* S&P 500 data collected from

** Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss. Past performance is not a guarantee of future results. This material may contain forward looking statements and projections. There are no guarantees that these results will be achieved. It is our goal to help investors by identifying changing market conditions, however, investors should be aware that no investment advisor can accurately predict all of the changes that may occur in the economy or the stock market. The Standard & Poor’s 500 (S&P 500) is a stock market index containing the stocks of 500 American corporations with large market capitalization that are considered to be widely held. The S&P 500 is unmanaged and cannot be invested in directly.

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