3rd Quarter Market Recap
3rd Quarter Market Recap (9/30/2018)
Bull run historyWe officially made it! The S&P 500 is in the longest Bull Run in its history; 114 months of cyclical growth. If you closed your eyes to the recent volatility, investors have had a nice ride to the top over the last 9 years. Now that we are in what seems to be the last quarter of economic growth, investors are asking “Should we warm up the bus, or prepare for overtime?”. Just like the Buffalo Bills, we think you shouldn’t write of the season too early. Bull markets don’t die of old age; something has to be the catalyst for change and the economy remains strong heading into the end of the year. We don’t think it’s the time to add more risk to your portfolios, but that doesn’t mean we are packing up early.
What will the future hold?Political uncertainty is the biggest headwind that we will face in the last quarter; unfortunately this is hard to plan for. Come November, all eyes will be on the midterm elections and we will look for more clarity on trade agreements. International markets have yet to participate in the rally. If politics begin to align with fundamentals, we could see this area be the next growth opportunity, especially in emerging economies. Based on current prices, we believe international markets have the strongest case for future growth and we have started to increase our allocation to these areas in our equity portfolios.
Interest rate environmentFor fixed income investors, it is all about balance in this rising interest rate environment. On one hand, rising rates indicate a growing economy and gives those an opportunity to reinvest at higher rates. On the other hand, your current bonds are going to be under pressure and some will be tempted to reach for better performing asset classes. When volatility returns, those traditional bonds will protect on the downside, more so than the riskier counterparts. We have made changes to the fixed income portion of our portfolios to try to reduce the interest rate risk, while not over extending our risk budget.
Overall, when you are winning the game, no need to try new trick plays, just run out the clock. We thank you for following our blog to keep informed on financial planning. If you have any questions regarding your specific portfolio, please reach out to your advisor for further details.
WEEKLY SEGMENT ON WYRKYou can catch our weekly Plan.Protect.Invest. segment live on WYRK 106.5FM at 7:20am every Wednesday. Each week we will have a Sgroi Financial planner on with Clay Moden and the WYRK morning show to discuss financial topics to educate and help their listeners. Since 1971 Sgroi Financial has proudly served Buffalo, NY and the Western New York community from our West Seneca location.
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