Retirement planning requires plenty of thought and substantive analysis. Many pieces of that process include vague estimates about potential return, potential income growth, potential life span, and potential spending habits and obligations. Even for financially literate people, it is challenging to deal with that many unknowns and non-linear relationships.
Understanding how to manage duration, credit risk and correlation when allocating fixed-income securities is more important than ever.
The focus for markets through much of the fourth quarter was the political drama surrounding the US tax bill and, of course, the price of Bitcoin. The US tax bill was debated and passed by both the House and Senate, and signed by President Trump before year-end.
This year, US stock markets seem to have given investors somewhat distinctive price action in each quarter. In Q1 there were large swings in volatility and prices, after what had been a low volatility experience in 2018.
The first half of 2018 presented investors with potential reasons to be either optimistic or uncertain about markets looking ahead. On the one hand, the domestic growth story in the US seems to be relatively strong, braced by the tax cuts, fiscal, and deregulation agenda put in place by the Trump administration.
The first quarter of this year was ushered in by strong stock markets, rising inflation and interest rate expectations, and the appointment of a new chairman of the US Federal Reserve. After a prolonged period of low volatility for stock markets, prices began to wobble the very week in early February that Jerome Powell was sworn in at the Fed. Market volatility became the story through the rest of the quarter.