Stay the Course in a Volatile Market

Stay the Course in a Volatile Market

Instead of being worried by volatility, be prepared.

Stay the Course in a Volatile Market

"Protecting You and Your Family"

Volatility is a statistical measure of the tendency of a market or security to rise or fall sharply within a short period of time. Instead of being worried by volatility, be prepared.

Solid economic growth, improving corporate earnings and stable inflation propelled markets to a succession of record highs in 2017. The uptrend lasted into the early parts of this year, but a wave of worldwide selloffs jolted the market last week. Several triggers points may have caused the sudden change: a spike in U.S. bond yields; increasing U.S. wages; and additional data that suggests rising inflation and interest rates.

The Dow plummeted 1,175 points on Monday before a Tuesday rebound. For many market participants, the selloff may have signaled a sea change. However, we do not share that view. Rather, we see the sudden drop as a technical (and even welcome) pullback in an ongoing bull market that needed to let off some steam. Despite the recent fluctuations, we believe investors can take comfort. The fundamentals that supported one of the longest market rallies in history have not changed. Our opinion is that they may have improved in recent months.

four Point Financial, Brian Farley

Four Point Financial helping with your investments

The global economy is gathering strength and we can expect it to grow at over 3% this year. In addition, the tax-cuts passed by the U.S. Congress at the beginning of the year may give the country’s economy an added boost and reduced corporate tax rates should help keep earnings healthy. We have experienced a long period of record-low interest rates and muted inflation, but that will eventually change. However, we do not think investors need to worry about a sudden burst in inflation, and we believe the U.S. Federal Reserve will maintain its plan to raise interest rates three times by yearend. This would still leave us in the relatively low interest rate environment that has supported the market for years.

It is difficult to support the case for a protracted bear market and current analysis should help give investors the confidence to stay course through this volatile time. Tactical Allocation in Action Our tactical approach came into play as we watched the exuberant market action over the course of January. When sentiment indicators moved into excessively bullish territory, we used options to hedge our equity position in our Sun Life Granite Managed Portfolios. Even as the market tumbled, we took profits on the hedge. We believe that much of the excess bullish sentiment has been wrung out of the market and we are ready to reposition Granite Portfolios to take advantage of the opportunities created by recent volatility. When you are in it for the long haul, market downturns are simply part of the deal.

Four Point Financial, Brian Farley

What is Bear Market

No Matter What Happens

No matter what happens in the short term — whether we are taking steps to reduce risk or seeking opportunities for added returns — our focus remains steadfast on our long-term investment objectives.

(Original article by Sadiq S. Adatia February 6, 2018)

Brian Farley,

Four Point Financial

Protecting you and your Family

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