Wow, this is a good question, one we received from a client recently. The news seems so confusing these days. There has been a historic government shutdown, yet the market grew throughout that entire period. However, prior to that, the market lost 19.3% from October 1, 2018 through Christmas Eve. (according to Morningstar.com) Of course, it rebounded and recovered over half of that loss.
This brings up a few thoughts to consider. First, with so many news channels available, those presenting the news must continually find something to talk about. Therefore, they regurgitate the same stories over and over. This creates a sense of importance that may not be warranted for the particular story. Second, there is an old saying that “blood sells.” Therefore, the news channels are going to talk in the most aggravated tone possible. Finally, when it comes to the market, many of the “facts” that you receive in a news show are not very helpful to you without context. So, it is a great idea to listen so you can stay up to date on current events. But please remember there is a context that you may not be receiving from the news show.
As you have read in the previous articles over the last few months, our current markets and economic framework is negative. This means the areas of the market and economy we watch are trending down. This means according to our rules-based approach, we are making conservative changes in many of our client’s accounts. Of course, you will need to speak to your advisor to see how this affects you personally. Our negative framework does not mean the markets will go straight down. We think the markets will have ups, downs, and sideways moves throughout 2019. We believe the overall trend will be down and will manage accordingly.
Here is the big disclaimer, we don’t have a crystal ball. The good thing about our rules-based approach is that it takes the guess work out of investment management and helps us flow with what the market is actually doing.
So, should you be scared because your friend is? No, not at all. This is not to be preachy, but it is a great verse; “for God has not given us a spirit of fear, but of power, love, and self-discipline.” (2 timothy 1:7 NLT) Be sure that you are working with your advisor, setting and maintaining your goals, and together maintaining self-discipline.