Bolton Investment continuously and diligently watches what’s happening in the markets and would like to provide our view on the recent volatility.
Past significant declines in the stock and bond markets have usually been precipitated or accelerated by an event, whether it was a foreign currency or debt crisis, the technology stock bubble and proceeding burst after Y2K, the tragic events on September 11th, or the near collapse of the financial system due to the mortgage crises. We don’t see one overarching cause for the current market volatility however some of the catalysts include: the Federal Reserve’s tightening of the money supply, trade and tariff policy uncertainty, the current government shutdown, as well as a change in control with the House of Representatives. It is also normal to see a correction in equity prices after a long period of appreciation where valuations may get extended.
Despite the market volatility, the U.S. economy continues to produce relatively strong numbers. Gross Domestic Product (GDP), which is a measure of the economy’s strength, is relatively strong compared to 2016 and 2017, and unemployment recently reached its lowest level since 1969. Interest rates, while rising, remain at historically low levels, and there are no indications of inflation.
At Bolton we believe that the rates of return for long-term investors should be based on 10 and 20-year projections of returns, and single negative quarters should not cause a fiduciary to deviate from prudent investment strategies. (Past performance, however, is not an indicator of future returns).
If you would like to discuss the prudence of your Defined Benefit investment strategy, please contact:
Alton D, Fryer IV, AIF
If you would like to discuss the prudence of your Defined Contribution investment strategy, please contact:
Michael P. Beczkowski, AIF, AIFA, CPFA, PPC, MSF, CHSA