The numbers tell the story: Rising interest rates and trade uncertainties could no longer be ignored by financial markets and years of plenty have come to an end. Volatility increased, at times quite sharply. Economic growth continued to support corporate profits, but the higher cost of money ultimately can only result in lower consumption patterns, hence some of the corporate profit forecasts came under scrutiny.
Politically, it was another unsettled and unsettling year in which the standing of the global economic order was increasingly questioned, if not challenged. Moreover, with the centenary anniversary of the end of World War I, many parallels were drawn to a time when globalization bloomed and then suddenly died for the flimsiest of reasons.
This is the time of the year for gurus (many of them self-proclaimed) to make their predictions. We do not claim to be gurus. We watch the different currents and attempt to float with them efficiently towards a chosen destination while properly managing risks. We don’t know if markets will be up or down in a year’s time, but we know that markets always correct overbought and oversold situations and that in the long term the odds are always in favour of those who stay invested in quality assets. That said, volatility will likely be a feature of 2019 as markets try to find a new equilibrium.
Volatility however should not be confused with panic. For long-term investors, volatility is more of an opportunity than a risk or a setback. Fortunes are lost trying to move with the market or with ill-fated attempts to be a step ahead of the market. Positive returns are achieved with patience, careful asset allocation and a clear goal in mind.
Talking about goals, this is the time of the year to start a new, which implicates a review of where we came from and where we want to go.
Talking about goals, this is the time of the year to start anew, which implicates a review of where we came from, where we stand, and where we wish to go. Personal objectives change with time, as do tax issues, investment returns, health and family dynamics, to name a few. A sound and sane perspective on our lives is worth a re-evaluation. To distinguish what is and what isn’t important to us is an increasingly bigger challenge, and one which we can only deal with as individuals.
We must therefore examine every situation as it specifically relates to us, and the particular phase of life we’re in. For instance, is our last will up-to-date, do our investments generate the income we require, are our assets in line with our risk tolerance, are we mentally and financially prepared for retirement, and the list goes on. It is never strictly a question of money, but much more so about finding comfortable mental stability, peace of mind, and the assurance that we are surrounded by a network of people that can offer us the guidance we need when we need it.