TrustWell’s Quarterly Market Review: Q3 2018

By Brett Freese

Highlights

Global Trade Policy and Discussion:
Regardless of your political bent, the trade discussions and policies have been “interesting” to say the least. In light of this – US equities have outperformed (for the most part) international equities. If trade tensions ease then investment may likely flow back into international equities.

Federal Reserve:
On 9/26 The Federal Open Market Committee continued to raise short term rates on a managed plan. No major inflationary pressures as of yet, but the low unemployment rate does put some pressure on the Fed to stay ahead of keeping rates low too long.

Midterm Elections:
It remains to be seen what the overall outcome to the stock market will be, but short-term volatility (market movement up and down) will likely increase.

Market Scorecard for the 3rd Quarter of 2018:

US Equities:
+7.71% S&P 500 (Index of the largest US publicly traded companies)
+3.58% Russell 2000 (Index of 2000 Small-cap US publicly traded companies)

Global Equities:
+1.76% MSCI EAFE (Index of Large and Mid-cap across 21 developed markets non-US)
-0.97% MSCI EM (Index of Large and Mid-cap across 24 emerging markets non-US)

US Bonds:
+0.02% Barclays US Aggregate Bond Index (Broad Bond Market Index)
+0.46% USTREAS T-Bill Constant Maturity Index (US Short-term Bills Index)
-0.15% Barclays Municipal Bond Index

Other:
-0.03% Morningstar World Bond Category Index
-9.22% Commodities – Precious Metals

Market Indicators:

Inflation:
2.7% as of 9/14/18

Unemployment:
3.9% as of 9/7/18

Fed Funds Target Rate:
2.5% as of 9/26/18

Historical Stock Market Declines and Rebounds are normative

A 5% or greater loss occurs about 3 times a year
A 10% or greater loss occurs about once a year
A 15% or greater loss occurs about once every 2 years
A 20% or greater loss occurs about once every 3.5 years

Suggested Next Steps:
• Make sure you understand how your investment allocation and diversification are important factors in both risk management and returns.

• Understand that market cycles are normal. The markets go up and down in mostly unpredictive directions and size. The ups and downs of investments many times seem to make sense after they happen, however, market prediction is very difficult (i.e. the next stock market crash has been predicted every year since 2008).

• Your investments are just one factor in the success of your life, money and purpose. Make sure that you are confident in your full financial plan.

• If you have questions about your investment plan, please schedule a phone or in-person meeting with your TrustWell Financial Advisor.