Halfway through the year seems like a good time to do a market update.

As we approach the end of the first half of 2018, we’ve seen far more volatility in the stock markets than we saw last year. In all of 2017, there were only eight days when the S&P 500 closed up or down more than 1%. This year is quite a different story.

Year to date, the S&P 500 is up 1.63%*, while the Dow Jones Industrial Average is down 1.89%*. The tech heavy NASDAQ is up 9.11%* as large cap technology companies such as Amazon, Netflix and Nvidia led the way. Notably, the small cap Russell 2000 gained some footing and rose 7.96%* so far this year. Internationally, the EAFE Index (an index designed to represent the stock markets across 21 developed countries outside the US) is down 3.43%** year to date (as of 6/22).

In other markets, the ten year US Treasury started the year at a yield of 2.405%, rose to 3.07% and then dropped to its current level of 2.88%*. This led the Bloomberg Barclays US Aggregate Bond Index to post a year to date loss of 2.56% (total return, as of 6/22/2018)***. Finally, the US Dollar started the year at 92.12, dropped to 88.59 and finished today (6/25) at 94.31^.

Now, had you gone to sleep on New Year’s Eve and then woke up today, you might think that the markets have been pretty boring. After all, a 1.63% gain in the S&P 500 is hardly anything to write home (or a blog) about. But the year to date returns belie the volatility we’ve seen this year. In the first 18 trading days of the year (by 1/26), the S&P 500 rose 7.45%. This was followed by a 10.16% drop in the next nine trading days (by 2/8). By February 26th, we were back within about 3% of the all-time high, only to be in correction territory^^ again by March 23rd. Since then we’ve been vacillating up and down with a slightly positive tilt. Phew, what a ride!

For whatever reason, the markets, which barely reacted to anything last year, seem to be reacting to everything this year. Early on, tax reform seemed to be pushing the stock market higher with the idea that lower taxes and repatriated funds would increase corporate earnings. Then wage inflation spooked the bond market causing interest rates to jump and the stock market to drop. Subsequently, talk of tariffs, trade wars, North Korea, immigration, etc. have caused much economic uncertainty which was reflected in the markets.

While the markets have been volatile this year, it may be that we have forgotten how markets act. Last year’s low volatility was more the exception than the rule. Corrections, such as the one we had this year, really should happen every 12 to 18 months. So, this is a normal thing. That being said, buckle up for the second half of the year. Most of the issues that caused the uncertainty in the first half have not been resolved. So, get ready for more of the same.

 

*All year to date returns as of 6/25/2018, except where noted. www.finance.yahoo.com

**www.msci.com

***www.morningstar.com

^https://www.marketwatch.com/investing/index/dxy

^^A correction is a reverse movement, usually negative, of at least 10% in a stock, bond, commodity or index to adjust for an overvaluation. https://www.investopedia.com/terms/c/correction.asp

*Non-deposit investment products and services are offered through CUSO Financial Services, L.P. (“CFS”), a registered broker-dealer (Member FINRA/SIPC) and SEC Registered Investment Advisor. Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. Verity Credit Union has contracted with CFS to make non-deposit investment products and services available to credit union members.

Gavin Chinn, CFS* Financial Advisor

Check the background of this investment professional on FINRA’s BrokerCheck.

An Investment Advisor registered through CUSO Financial Services, L.P., Gavin has 22 years of experience as an advisor in the Puget Sound area.

“I believe every client is unique and deserving of a personalized financial plan that will help them reach their individual financial goals. Before I make any recommendations, I like to get to know my clients. By asking the right questions, and developing an honest, trusting relationship I can really get a sense of what’s going to work best for them.”

Gavin graduated from the University of Washington with a BA in Business Administration and started his financial career with US Bank in the Investment Department. Prior to joining Verity in 2006, he spent eight years with Piper Jaffray.

So what is Gavin’s vision for his dream retirement?

“My dream retirement would be absolutely worry free: financially, emotionally, and in every aspect of life. My finances would be in order so expenses for travel, luxuries, and gifts for the kids, grandkids, and great-grandkids would be taken care of. My kids would be financially sound, so I would be confident in their prosperity. This would give me the freedom to travel and play and do whatever it is I want to do.”

When Gavin’s not working, he enjoys spending time with friends and family, watching Husky football, and taking weekend trips around the Northwest.

Gavin is registered to transact securities business in the states of WA, OR, CA, AZ, FL, HI, ID, IL, MN, NM, NY and VA.

*Non-deposit investment products and services are offered through CUSO Financial Services, L.P. (“CFS”), a registered broker-dealer (Member FINRA/SIPC) and SEC Registered Investment Advisor. Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. Verity Credit Union has contracted with CFS to make non-deposit investment products and services available to credit union members.

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