Recent Volatility – Some Perspective

Dear Friends,

Well, as we mentioned in our January 12 letter and our December 27 and November 22 emails, we thought volatility would return to the markets in 2018 and it certainly has!

Over the past 80 years, short term volatility – the kind that produces short lived declines of 5-10% (much like what is currently happening) – occurs about three times each year. These types of declines are often emotionally driven (particularly this week) but are typically followed by equally quick recoveries. 2017 in fact was abnormal because there wasn’t much volatility. Just one week ago the markets were in their longest stretch without at least a 3% decline.

Nothing has changed in the economic landscape over the past week to suggest there is something bigger at work. In fact, corporate profits are growing at 13% from a year ago; consumer spending is up on the strength of average payroll increases of 3%; and yet to come are the positive impacts of the tax cuts for 2018.

Bottom line, sit tight and don’t get too caught up in the headlines – history suggests this is just a normal part of the behavior of the markets.

Our client meeting earlier this week featured a 2018 Outlook. The outlook for the road ahead continues to look good with the global economy recovering and interest rates remaining low on a historical basis. The discussion revolved around a handout which can be found at https://www.capitalgroup.com/ca/pdf/en/public/2018_Outlook.pdf. Feel free to review this document and either send us an email or call the office at 407-629-6477 with any questions.

If you missed this last meeting, be sure to mark your calendar for our next one on Tuesday, March 20. This is a dinner meeting at the Country Club of Orlando and our featured speaker is Bill Cass of Putnam Investments.

Tax time is upon us and we already are scheduling final reviews of completed tax returns. If we have previously prepared your taxes, please forward us as soon as possible the information noted in the personalized Tax Organizer we mailed you a couple of weeks ago. If you would like to take advantage of our tax preparation service, please contact us.

The start of the year is always a good time for a review so if you have not been in to see us lately feel free to contact the office to schedule a conversation.