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Perspective on Recent Market Volatility

Total Wealth Planning

The following is a message from Total Wealth Planning relative to recent market performance and volatility:

Stocks in the U.S. recorded solid gains in the third quarter of 2018, with the large-cap S&P 500 Index logging its biggest quarterly advance in nearly five years. The small-cap benchmarks lagged the broader market, but all of the major indexes reached new highs. Growth stocks handily outpaced value shares, largely due to outperformance experienced earlier in the quarter. International markets also generally rose during the quarter led largely by Japanese stocks.  These strong returns occurred during a period of low volatility compared to previous quarters this year.

The investment market environment changed dramatically, however, during the first few weeks of October.  Volatility increased and markets are now close to the levels seen at the beginning of the year.  At the same time though, the U.S. and most countries overseas continue to experience a “Goldilocks economy”, one that is neither too hot nor too cold. This is the most desirable form of economic growth, especially when accompanied with a low rate of inflation. Under these conditions, the investment markets typically experience short term volatility at some point during the year, but most often provide positive returns over the course of a full calendar year. Further, the market volatility experienced in the last few weeks is more in line with historical norms as illustrated in this chart.

As the illustration shows, with the exception of 2017, it is not unusual to see movements in a single day where the markets either rise or fall by 1% or more. For the remainder of 2018, we expect that the markets will continue to exhibit volatility and it is reasonable to still expect positive results.

At Total Wealth Planning, we resist employing reactionary and short-term trading techniques which most often result in poor timing, unsatisfactory results and missed opportunities for growth. Instead, we maintain a disciplined and time tested approach, based upon the Nobel-Prize winning Modern Portfolio Approach to investing. As you would expect, however, we will continue to look for rebalancing opportunities, tax loss harvesting and will tune the portfolios as opportunities arise. In the meantime, if you have any questions or concerns, or would like to discuss further, please do not hesitate to contact us.


Total Wealth Planning
Investment Policy Committee

David Wilder, CFP®, MST

Rob Siegmann, MBA

Rob Lemmons, CFP®, CPA

Jon Andre, CFP®

Chris Allen, CFP®

Joel Musser, CFP®

Kelly Boone

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