The stock market had quite a wild ride during the first quarter of 2018.  In January we witnessed a record setting market rise that was supported by strong economic data and the impact of recent tax cuts.  Beginning in February, the markets were rattled by concerns about high stock valuations and robust U.S. wage growth that could lead to higher inflation and a hawkish Federal Reserve.  After a 10% correction, the markets began rising only to correct again in mid-March due to  fears of a trade war and increased government regulation in the technology industry (Facebook & Amazon).  The dramatic increase in stock market volatility is best displayed by looking at the number of days the S&P 500 Index gained or lost more than 1% in 2017 vs. the 1st Quarter of 2018.

Time Period Days S&P 500 Index Gained

or Lost More Than 1%
Entire Year 2017 8
1st Quarter 2018 23

 

While the stock market swings are difficult for investors to stomach, Shamrock believes the equity markets should continue to appreciate in 2018 due to the following factors:

 

While we can not overlook the fact that the bull market has entered its 9th year and that is very long by historical standards; we do not see a recession this year.  As the Federal Reserve continues to raise interest rates and shrink the balance sheet, there are concerns that the yield curve could invert.  The risk of an inverted Treasury yield curve, when short-term yields are higher than long-term yields, has proceeded most U.S. recessions over recent decades.  It is during recessionary periods when severe market corrections are most destructive to investor wealth.  We continue to look for the impending recessionary signals that would cause us to become more defensively positioned in order to protect your hard earned capital.

Please contact me at your convenience to review our outlook for 2018, your portfolio, and discuss how we will protect your assets during the next severe market downturn.  Melissa Terrill from our office will be contacting you shortly to schedule a call.

Providing Peace of Mind Since 1997.

 

Market Returns: All data is indicative of total return which includes capital gain/loss and reinvested dividends for noted period. Index data sources; MSCI, DJ-UBSCI, WTI, IDC, S&P. The information provided is believed to be reliable, but its accuracy or completeness is not warranted. This material is not intended as an offer or solicitation for the purchase or sale of any stock, bond, mutual fund, or any other financial instrument. The views and strategies discussed herein may not be appropriate and/or suitable for all investors. This material is meant solely for informational purposes, and is not intended to suffice as any type of accounting, legal, tax, or estate planning advice. Any and all forecasts mentioned are for illustrative purposes only and should not be interpreted as investment recommendations.