The U.S. equities market year-to-date for 2018 can be summed up in one word: volatile.
Market forces seem to be fighting against each other in a classic good versus evil scenario. Corporate earnings reports for quarter ending June 2018 are doing very well and the S&P 500 has shown 79% of companies that have reported, which is 406 of 500 thus far, have beaten analyst expectations according to Thompson Reuters as of August 3, 2018. The opposite forces trying to drag down the U.S. market are the “trade war” talks with China and the underperforming markets of international countries. Last week, the U.S. market took on defensive posturing as investors moved billions from the stock market into bonds. Turkey’s currency dilemma initiated this transfer and emerging markets inched closer to bear market territory. Europe has had 23 straight weeks of outflow from its equities markets. Higher U.S. dividend paying sectors – such as consumer staples, utilities, real estate, healthcare & telecoms – have been the best producing sectors over the past three months, which points again to growing caution among investors.
Here are things to consider in times of volatile markets:
- Corrections/pullbacks are a normal occurrence and can present opportunities. With the S&P 500 index having 5 pullbacks this year ranging from -2.9% to -10%, there have been several open doors for investors. Having cash on hand in an actively managed portfolio helps to take advantage of these pullbacks and position an investment at an opportune time. These opportunities can be found in sectors that are oversold, hurt by news, weaker than expected earnings report, etc.
- Following the trendlines of the current market is advantageous during volatile markets. When the market is near all-time highs, being cautious is sensible because a pullback could be right around the corner.
– Thomas DiCesare, Investment Advisor
Disclaimer: The opinions expressed herein are solely those of Wall Advisors, Inc. as of the date posted and are subject to change without notice based on market conditions and economic changes. This commentary is for educational purposes only and should not serve as financial advice or an offer to sell any product. None of the statements herein constitute a solicitation recommendation or an offer to buy, sell or hold any securities, other investments or to adopt any investment strategy or strategies. Past performance is not indicative of future results. These opinions do not guarantee any specific outcomes or returns and do not supersede personalized recommendations from your financial advisor. This material may not be suitable for your personal financial situation and investment objectives. Consultation with your financial advisor for specific strategies appropriate for your goals is recommended. Please feel free to contact us if you have any questions.