Broker Check

2nd Quarter Investment and Financial Planning Newsletter

April 20, 2018

At the beginning of each quarter, we like to review the factors that influenced the financial markets during the previous quarter and look ahead to what we can expect in the coming months. 

Quarterly Update 

In 2017, domestic markets experienced little volatility and significant gains.

The first quarter of 2018, however, did not continue these trends as the

CBOE Volatility Index (VIX), a popular measure of volatility, increased by 81% in Q1, as stock performance fluctuated.Between January and March, the S&P 500 had 23 days when it lost or gained 1%. In the last quarter of 2017, the index didn't have a single day where it fluctuated that much. While the return of volatility may feel jarring, it is actually normal. Last year's calm is what is unusual. 

Major domestic indexes hit new records in January then slipped into corrections the next month. By March's end, they recovered somewhat from February's lows, but the S&P 500 and Dow still posted their first quarterly losses in more than 2 years. The S&P 500 lost 1.2% and the Dow dropped 2.3%. The NASDAQ ended in positive territory, with a 2.3% gain for the quarter. 

The Economy Remained Strong 

Despite market volatility and lackluster quarterly performance, the economy appears to be on solid ground. When announcing March's interest rate increase, the Federal Reserve beefed up the economy's growth projections and expressed that "the economic outlook has strengthened in recent months." In 2018, the Fed expects unemployment to fall to 3.8% and the economy to grow by 2.7%. 

What's Ahead 

In the coming weeks, we will receive more data that reveals our Q1 economic performance. We will also work to find answers to important questions for the 2nd quarter, such as: What will happen with trade and tariffs? Will the labor market continue to strengthen? 

For a more detailed analysis on the market outlook for Q2, please click on the link below from our partners at Cetera Investment Management. 

2018 Q2 Market Outlook 

Tax Changes In 2018 

With the 2017 tax season over, we want to make sure you understand how the new 2018 tax plan will affect you. On January 1, a number of changes went into effect, including new tax brackets for citizens (see link below) and a permanent tax rate reduction for corporations. As a result, this law may impact both economic performance and your individual bottom line.  

Complete Guide To The New 2018 Tax Plan 

What This All Means For Your Portfolio 

Part of our job is to stress the importance of being comfortable with your portfolio. One of our main goals is to help you accumulate wealth without taking on undue risk. Markets rise and markets fall, but unless there have been changes in your circumstances or you've hit milestones in your life such as retirement, stay with the plan. By itself, a long run in stocks isn't a good reason to bail out of the market. Be comfortable with the level of risk you're taking as we set out to meet your objectives and overall financial goals. 

With all the volatility in the market, we can't stress the importance of diversification enough. Below is a chart of asset classes types and how they performed over the last ten years. 

Asset Class Performance Over the Last 10 Years

Please contact us to let us know if major changes have happened or are about to happen in your life. We want to make sure we are meeting our clients' expectations and part of that is making sure their financial portfolio matches up with overall goals.  

Hopefully you found this review helpful. Let me emphasize, it is our job to assist you! As always, if you have any questions or concerns about the financial markets, how the tax plan will effect you or your own personal financial situation, please contact us.


David Hanson & Carl Hanson, CFP®