Derek Majkowski. Any opinions are those of Derek Majkowski and not necessarily those of RJFS or Raymond James. Opinions expressed are as of this date and are subject to change without notice.
Spring fever has kicked into full effect this year as we were teased here in DC with a warmer than usual February, but a colder than usual March and early April. We had Nor’easters, snow, and the area’s beloved Cherry Blossoms were delayed by weeks due the below normal temperatures. It has had many yearning for warmer weather in the area.
In the news we had the tragic gun shootings in Florida, more firings and changes in the administration, trade war talks, Syria and a different kind of “Stormy” to name a few. Stock markets remained volatile and the Federal Reserve continued their march toward “normalization” by again raising short-term interest rates.
Throughout the first quarter we fielded – for the first time in months – questions about statement values going down and asset valuations lower than in previous months. As mentioned in our previous posts, volatility is back and unlike 2017 where we seemed to go just up, 2018 is reminding us that stocks do not go straight up and corrections usually or may happen within a year.
The volatility and unpredictability of both the weather and the market – which really is more the norm than the exception – should not surprise or shock anyone. It is nothing new, and is part of our daily life. It is also why we prepare, or try to prepare, for the possibility of multiple outcomes and scenarios.
Like attempting to prognosticate the weather on any given day, why is it that we bring along a coat or an umbrella when it appears to be warm and sunny? We may be reading, seeing on the news, or hearing from someone that the day will play out a particular way, but we are never really certain. So, we prepare for possible outcomes based on information we believe to be reliable, but clearly not what we deem to be 100% correct.
The opposite also holds true, sometimes – despite the current temperate conditions and access to information – things could change later in the day, possibly dramatically, and one should grab that coat or umbrella just-in-case. For several reasons however, we may not heed the advice and warnings.
We may not change our approach, or prepare for a potential swings in the current state. When change does occur, one may be caught off guard, and under less dramatic situations, that person may end up cold, wet, or stuck somewhere until conditions improve.
Managing one’s funds is the same thing. We can present and presume general expectations based on someone’s circumstances of their short, intermediate and long-term goals and needs, but do not know exactly how the many moving parts will play out. Especially when it comes to predicting markets and asset price action from one day to the next – so we try to prepare for several outcomes, and anticipate that there will be storms and rocky conditions at some point.
When reviewing quarterly statements, while you sit inside waiting for warmer and dryer days, let the volatility of 2018 in stock and bond markets serve as a catalyst to review how well your portfolio is weathering the less-than-perfect climate in the markets.
Ask yourself – Have any of your goals changed recently? Do you need to raise liquidity, or is there cash to put to work? What impact has rising rates had on your portfolio – if any? Do you need to change anything or not?
Most people start each day with some plan, set of tasks, obligations and / or goals they either have to, or would like to accomplish. The unpredictability of the environment(however you would like to define that), obviously can influence one’s approach and ultimately one’s success and outcome.
It is always important to acknowledge and prepare for those scenarios and potential outcomes influenced by external and uncontrollable forces, while maintaining an eye on the goals, tasks and priorities at hand. This both in the short and long-term.
So as I sit waiting for spring to finally come, I am reminded (again) that I cannot control the weather. All I can do is control how I want to handle it, and move on with my day.
And today, I’m heading south where it’s warmer…
Happy Spring!
The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy selected.
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