2016 First Quarter in Review
From January 1st of 2015 through the end of the 1st quarter of 2016 the S&P 500 gained a total of 0.84%. Yet it moved a total of 4,735 points during that time.* The chart below shows that volatility.
At the end of the 1st quarter, we are right back to where we started from. Back to struggling with the same question:
Are the fundamentals strong enough to support asset prices without the backing or stimulus of the Federal Reserve?
The volatility that we predicted was based on the notion that the Fed was no longer “guaranteed” to be backing the market, or their effectiveness would be diminished. Market liquidity as a result has been reduced and market movements more extreme.
We believe this volatility will continue. We will be implementing new ways to measure Risk tolerance during the volatility - when it means the most.
The hope is that fiscal policy makers can begin to pick up where the Fed is leaving off and promote growth. In the meantime, we will be increasing liquidity in portfolios compensating for the reduced liquidity in the markets.
*Hat tip - Ryan Detrick LPL