April 2018

Q1 Report

Vicki Simpson


The first quarter of 2018 marked a dramatic turnaround from the positive return and low volatility environment we enjoyed during 2017. Volatility in stocks, bonds, and other asset classes returned with a vengeance and all of our portfolio benchmarks, with the exception of emerging markets, ended the quarter with negative returns.

I often wonder to what one compared the volatility of the markets prior to the invention of the rollercoaster. New and exciting developments like steel and technology brought evermore impressive results to the experience – for both rollercoasters and markets. The first quarter of this year feels like that first downhill after the initial exhilarating climb. Of course, you don’t know how long that drop will be following that glorious, yet brief, moment at the top of the world, but you are anticipating something. 

2018 First Quarter Market Returns.jpg

Looking at the major index returns for Q1, it sure looks like a deep dive, but this is where we remember the nature of the rollercoaster - it is unpredictable. How do we endure the ride? We prepare and we diversify while keeping the long view. Your advisor discusses your goals, your risk tolerance and overall financial picture to create a plan for your portfolio. This is when you consider what type of rollercoaster you want to ride, what kind of experience you want to have, and how that will impact how you feel when you get off the rollercoaster. Whether you are a thrill seeker or ground keeper, risk taker or risk averse, we diversify portfolios to help absorb some of the impact. Diversification is the best risk management tool to help us get through the loop-de-loops, highs, lows and plateaus. Of course we can’t predict how far down it goes or when it will go back up, but we can take a breath and trust our preparation and diversification to keep us on the tracks. We just might not be able to get off for a while… Dramamine, anyone?

Committees - Change in Action

One of the many ways we strive to serve our clients well is through… committees! Our Investment Committee (IC) is comprised of Kevin Slater, Kevin Rigg, Ben Jennings and Vicki Simpson. We meet on a regular basis, usually every other week, to review portfolio performance, market analysis, and other topics that impact your overall portfolios.

To better understand our process, I (Vicki) would like to share a recent example of how we moved a decision from proposal to committee to analysis and finally, implementation. To read more about our process, click here.

Market Timing – A Silver Bullet?

During times of extreme market volatility there is a noticeable increase in headlines promoting market timing strategies. As investors grow anxious with the wild swings in the market and seeing losses on their portfolio account statements, these strategies can begin to look appealing. After all, who wouldn’t want to avoid losses on their investments? But, herein lies the rub: if a strategy existed that signaled investors to get out of the market every time it dropped, then everyone would be using it. There is no silver bullet.

The following article explains one of the more common signaling techniques traders use for predicting a drop in the stock market and why you are likely to end up worse off trying to use it. To read the Bloomberg article, click here.