Happy New Year to everyone and all the best for 2019.
2018 certainly did not end on a high note for investors. While we could say that Santa turned up, it was not until after Christmas had ended.
Markets are behaving in a confused manner. In December the markets were very volatile, not just from day to day, but also during the course of the day. Part of the extra movement is due to computer trading models that follow algorithms or words in news reports, but basically investors are unsure and that is creating uncertainty.
The China / US trade war and a feared slowing global economy are the current major issues. However we feel that many investors who experienced the GFC are still affected by the experience. To ensure that we did not see greater disaster in the GFC some extreme policy actions were taken (extreme, but necessary). Ten years later, outside the US who has at least moved rates up, nothing has been done to reverse these extreme policy settings. In Europe, Japan and Australian interest rates are still at rock bottom. This means that we will need to rely on government spending and policy if the world slows as there is not much that the Reserve Banks can do.
So while there is certainly a slowdown globally, the US economy is still powering along in reality. The trade war could conclude and China could launch one their stimulus packages at the push of a button.
We follow all the news and economics closely, but we are careful not to jump at every possibility and let our imagination take control of the future and our emotions. We just keep trying to buy quality investments at reasonable prices and avoid buying or even selling when investors get too excited.
For further information or to discuss how we can help you, please speak to your adviser.