Broker Check

Q2 2019 Perspective: Volatility Has a Silver Lining

April 18, 2019
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Perspective Series: bringing you perspective enhancing commentary, often from third party experts, to benefit you, your family, and your network.

Before we introduce this quarter’s third-party Perspective, let’s take a look at last quarter’s note from the second week of January titled, John Wayne Investing:

If we fit a market cycle to the framework of classic western films, 2018 definitely was not a last stand shootout, it wasn’t the high speed horse chase either, those scenes are still to come. I don’t think we even got to the point where the hero says, “Saddle up partner, looks like trouble comin’ our way.” It was more like the year ended with suspicious horse prints in the mud.

Those suspicious prints could be things like trade tariffs, costly political mistakes, rising interest rates and quantitative tightening by the Federal Reserve. If so, these could spell trouble in 2019. Then again, those hoof-prints could turn out to be from old friends who ride onto the scene and dominate the story in 2019. Here we’re talking about strong US economic fundamentals including jobs, consumer confidence, corporate profits and stable inflation.

https://www.myopenadvisors.com/blog/q1-2019-perspective-john-wayne-investing

 These comments were written at time when the preceding three months saw the S&P 500 decline -13.5% and the purpose was to acknowledge two things:

  1. We were (and still are) late in the bull market stage of the market cycle, and…
  2. Even though we were experiencing volatility, there was not enough evidence to indicate we had entered a bear market or recession

For more on market cycles, visit:

https://www.crestmontresearch.com/docs/Stock-Secular-Chart.pdf

 Fast forward three months and we have seen the positive side of volatility with the S&P 500 recovering +13.65% in the first quarter of 2019. Experience through the ups and downs, bull markets and bear markets, economic expansions and recessions has taught us that the keys to navigating changing markets include:  prudent diversification, historical perspective, sound adviceand determination. At Open Advisors, we implement investment strategies that are tailored to your financial plan, in order to put Your Future In Motion. Now.

 We hope you enjoy this quarter’s Perspective, which is a 5 minute video from PIMCO on the topic of volatility:

https://www.pimco.com/en-us/resources/video-library/media/volatility-has-a-silver-lining

 Key takeaways from PIMCO:

  • Volatility is a two-sided coin and both sides create opportunity
  • Late cycle investing requires: patience, defensive strategies, flexibility
  • Valuation matters

Please don’t hesitate to reach out if you would like to discuss.

CRN2506331-041719