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Weathering a Volatile Market in 2019

Ted Rubin 

Ted Rubin

VP Investment & Retirement Services, Senior Investment Advisor, CUSO Financial Services, L.P. (CFS)*

As we launch into 2019, the main theme in the markets is volatility.

With so many uncertainties, long-term planning never has been more important. While it’s not always possible to be completely at ease with your plan, it is important that you’re not losing sleep over your portfolio.

Since the Federal Reserve began decreasing interest rates to a record low 10 years ago, its main goal has been to create an environment conducive to reinvigorating the economy while keeping market volatility to a minimum. But after nine positive years in the S&P, we’ve witnessed the equity markets sell off and 10-year US treasury yields decline in a dramatic, accelerated fashion. In addition, we see three main issues that could suggest a potential slowdown in global growth:

  • Trade tensions, especially between US/China, remain an overhanging dampener.
  • Concerns about the Federal Reserve raising interest rates too fast.
  • Earnings growth will continue to slow as year-over-year comparisons become more challenging.

I would also add an overexuberance in equity share prices, especially in technology stocks. But finding a short-term market bottom might be closer and closer as fear and extremely negative sentiment increase.

Long-term planning never has been more important.

Though there’s no foolproof way to handle ups and downs in the stock market, these common-sense tips can help:

  • Don’t put all your eggs in one basket – Diversifying your investment portfolio is one of the key tools for trying to manage market volatility. Because asset classes often perform differently under different market conditions, spreading your assets across a variety of investments—such as stocks, bonds, and cash alternatives—has the potential to help reduce your overall risk.
  • Focus on the forest, not the trees – As the market goes up and down, it’s easy to become too focused on the day-to-day return. Instead, keep your eyes on your long-term investing goals and overall portfolio. Don’t overestimate the effect of short-term price fluctuations on your portfolio.
  • Look for the silver lining – A down market, like every cloud, has a silver lining. The silver lining of a down market is the opportunity to buy shares of stock at lower prices.

Lastly, don’t stick your head in the sand. While focusing too much on short-term gains or losses is unwise, so is ignoring your investments. You should sit down with your CFS financial advisor at SIRS at least once a year—more frequently if the market is particularly volatile or when you experience a life-changing event.

 

* Nondeposit investment products and services are offered through CUSO Financial Services, L.P. ("CFS"), a registered broker-dealer (Member FINRA/ SIPC) and SEC Registered Investment Advisor. Nondeposit investment products offered through CFS are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. SELCO Community Credit Union has contracted with CFS to make nondeposit investment products and services available to credit union members.

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