“If there’s one thing that’s certain in business, it’s uncertainty.” – Stephen Covey
We’re halfway through 2019 which is as good a time as any to reflect on what’s happened so far this year, and look ahead to what the script may be for the second half. But before we go down that road, let’s ground ourselves in two key truths:
1) Uncertainty is the normal, in fact inescapable, state of the world.
2) While people can give their educated opinions, no one actually knows how the future will unfold.
While these are rather vanilla statements, they are incredibly important to keep in mind when we look at some of the key drivers of uncertainty today. For instance, let’s take the topic of trade wars and tariffs. It’s pretty easy on the surface to say that trade wars are bad and if trade tensions escalate it will be bad for markets, while if the trade conflict gets resolved that would be good. Indeed, this is probably true.
But that statement doesn’t necessarily move us forward, it just identifies the problem. If we really want to turn that into useful information we not only have to say whether we believe the trade conflicts will or won’t be resolved, but when might that happen, what form will it take, how much damage will the tensions do in the meantime. It quickly becomes apparent that anyone with any humility will have to admit that their prediction about the future simply their best guess.
Which brings us to the key thing you must remember as a smart and prudent investor: focus on the things you can control. You don’t control what the markets do, but you can decide how much you want to participate in it. You don’t control who gets elected President, or how the U.S. and China resolve their differences, but you do get to control how disciplined you are in practicing good investing behavior.
So when all is said and done just remember that all the information out there in print, on TV, or on the radio is somebody’s best guess about what might happen in the future, and they have no business telling you what you should do when they don’t know a lick about you. That’s why you have an advisor who knows you and cares about you.
So what do we think the future holds?
- Different markets will go up and down. They always have and always will.
- There are some very visible topics today creating uncertainty, such as trade conflict, the US Election, Brexit, and slowing global growth among others. We expect that these factors will continue to make the market relatively volatile or bumpy.
- You should hold money that you may need in the near future in something that is safer / less bumpy. On the other hand your long term money can still be invested for the long term.
- No one knows the future, which is why we’re here to help you practice good disciplines. More money is lost by taking the wrong action than be being invested in something that goes down in value temporarily. Please lean on your advisor any time you’re feeling uncertain.
While we’re not here to try and predict the future, many of you are still interested in what’s going on in the world and how markets are reacting. The articles below give some good perspective on the world today.
Mid-Year Market Outlooks
- What’s the price of Uncertainty? – Fidelity
- A glimpse at our mid-year outlook debates – Blackrock
- Expect a tougher climb – Nuveen
Happy 4th of July Weekend
We hope you have a happy and safe 4th of July weekend. Every day we’re grateful for the opportunity to help you along your own personal journey of independence.