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What is happening in the markets?

There are several reasons we are seeing volatility global markets.  Here is a summary of two key points:

1)  Markets have had an exceptional run:

The first factor is the valuations of US stocks and stocks generally. We have had an extended period of low volatility and steady increases.  This has led to the Dow hitting an all-time high in January.  A correction is natural as stocks become more expensive and there is some profit taking.

2)  Increasing Interest Rates:

Positive economic data from the US suggest wages are increasing and inflation may rise faster than expected.  To counter balance inflation the Federal Reserve Bank may have to tighten monetary policy more than expected.  This would lead to increasing interest rates which potentially could slow economic growth.  This environment has been reflected in increasing yields on US Treasury bills.  Last week, the 10-year US Treasury bill increased to a four year high with the benchmark note approaching 3 % a level not seen since 2014.  Increased borrowing costs combined with wage growth may put pressure on lower corporate profits.   
What should investors do?

  • Keep it in perspective - downturns are normal and usually short lived. Typically, market setbacks have been followed by longer periods of advancing markets
  • Stay disciplined – stick to your long-term plan and do not make changes based on short-term fluctuations (positive or negative).  Trying to time the market has proven challenging – and could lower your overall long-term return.
  • Invest regularly, despite volatility.  Investing regularly will help mitigate any short-term fluctuations by buying more when prices are low and less when prices are high.
  • Be comfortable with your asset allocation and investments – make sure you understand the potential for volatility and you are comfortable with that before investing in the market.

Meet with Phi Hoang, Community Savings investment professional to speak more about your plan and how he can help you achieve long term financial success.


Phi Hoang
Investment Professional / Manager of Investment Services
phoang@comsavings.com
604.230.8657



Information was obtained from sources believed to be reliable; however, we cannot guarantee that it is accurate or complete. This report is provided as a general source of information and should not be considered personal investment advice or a solicitation to buy or sell any mutual funds and other securities. Please speak to your personal financial representative before making any financial planning decision or implementing any strategy. Mutual funds are offered through Credential Asset Management Inc. Mutual funds and other securities are offered through Credential Securities Inc.


 

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