Why have investment markets gone down 6.94%, up 1.79%, down 9.18% and up 7.87% in the last 4 months? (Hint: Uncertainty)

Why has the US stock market (represented by the S&P 500) gone down 6.94% in October, up 1.79% November, down 9.18% in December and up 7.87% January? (source: ycharts) Or in other words, why has the S&P 500, and most other stock markets around the world, been so volatile recently? In a word, uncertainty.

Whether it’s good news or bad, investment markets like knowing. They dislike not knowing. A few examples of the environment of uncertainty are: trade talks with China, status of diplomatic relationships with North Korea, Russia, and what interest rates are going to do. January 2019 the S&P 500 was up 7.87% in part because trade talks appear to be progressing to a conclusion, and the Federal Open Market Committee (FOMC) has given a clear picture that interest rates will remain stable.

What will February hold? So far, so good. Nine days to go…

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