Q2 | Use Calm Markets to Define Goals
Periods of low volatility allow you to shift focus from returns to goal planning
The second quarter of 2017 was much like the previous two, continuing the trend of low volatility despite global political uncertainty and events including the Syrian war and refugee crisis, Brexit, terrorism in Europe, the political aftermath of the U.S. election, and a growing North Korean nuclear threat. During the second quarter, we saw positive returns from every asset class. Developed international and emerging markets equities outperformed the U.S. market. In the U.S. and emerging markets, large caps outperformed small cap stocks and growth stocks outperformed value. In developed international markets, small outperformed large and growth outperformed value. Almost all developed market currencies outperformed the U.S. dollar, most notably the Euro.
The divergence of volatility and headline risk is very unusual and has prompted much speculation over the cause. Since volatility (or the lack of it) is not a good indicator of future returns, it makes sense to focus on investing in a balanced portfolio that has been chosen based on risk tolerance, capacity to assume risk and the required rate of return to meet goals. Don’t chase returns, since volatility spikes and market downturns can happen suddenly and unexpectedly. Calm markets are an ideal time to plan for the future and define your goals. Doing so will allow you to track your progress toward what really matters during the inevitable and persistent ups and downs in markets. Take a minute to read the details in the Q2 Market Summary.
J. Brent Everett, Chief Investment Officer