Recently, the markets have gotten a lot noisier with the return of volatility and amplified rhetoric around trade concerns and monetary policy. They are not likely to get any quieter with the midterm elections just around the corner. For the average investor it can be overwhelming and hard to know when to be concerned and when to tune out the noise. The market dashboard below shows that, while things may be noisy, there is no indication of an impending economic or market meltdown.
After last year’s tranquil environment, markets experienced a sharp pullback in February and have returned to a more normal level of volatility. As a result, many investors are wondering, where are we now and what’s next? The chart below highlights how recent events compare to the prior 11 corrections.
It’s important for investors to understand how different investment strategies work and how each performs under various market conditions. The chart below highlights 10 investment strategy groups and their performance ranking over the last decade. When building long-term growth portfolios, allocating among different strategies can help to reduce anxiety without sacrificing returns.
While stocks deliver unpredictable returns in the short-run, stocks are the least risky choice to build wealth over longer time periods. As the investment horizon increases, loss of purchasing power becomes the main risk.
With the surging economy and the recent shift in monetary policy, many investors are worried about rising interest rates and potential inflation. A little historical information can provide valuable perspective.
The last few years in the market have been as good as it gets with strong economic growth, increasing profitability, low volatility and surging markets. Everyone wants to know how long will the party last and what will the market do next? As the table below shows, there is little mystery regarding the new year’s expected return.