I would like to share some comments on the extreme market volatility of the last quarter of 2018, and especially the month of December.
I have been working with some money managers who will even go to cash if they feel market conditions warrant it. Some of those managers did indeed reduce exposure to equities, but the underlying U.S. economy is still showing strength including a terrific jobs report in December.
The CEO of one of the money managers we use, Vance Howard of Howard Capital Management, shared the following comments, “The current downside is emotionally-driven trading exacerbated by computer trading programs triggering sell signals. I don’t see this market volatility as being driven by fundamental forces signaling a recession. This looks like the classic signs of a short-term market sell-off, not a longer-term one. The market is going to trade back and forth for a period of time as the computerized trading calms down. These types of market conditions are ones where investors make the most mistakes. The human instinct is to 'react' or to 'do something' about the market action, when sitting tight can often be the best course of action.”
Vance Howard also added in one of their “Wealth Watch” editions that they have been at 100% cash in such cases as 2008, but most periods of volatility are short lived—historically 4 to 6 months.
After viewing, please feel free to call me if you have any questions on concerns about how your investments may be affected by current market conditions.
You don’t have to ride a volatile market to the bottom.
I am here to offer no-pressure advice about flexible and innovative financial solutions. I work with experienced money managers who offer investment strategies that can go into cash positions in event of a crisis to try to preserve your investment.*
