We all know that risks exist, but our feeling about a particular risk is driven by our recent experience. Even knowing that we are likely to have another big earthquake, knowing that the risk exists, people don’t actually prepare because they have no recent experience of it. Many investors have fallen into a false sense of diminished investment risk because of prolonged calm in the markets.
Trade tensions have proven quite real over the last three months and continue to dominate headlines. Market price volatility continues apace as well, affected by concerns not only about trade but also rising interest rates and energy prices.
Like the ebb and flow of the tide, we saw markets rush upward in January only to see them retreat back in February and March. We have also seen a few historically large single-day declines, only to see a big rebound a few days later. The primary reason given for this volatility has been broad concern about tariffs and a looming trade war with China.
Annually in January market predictions for the future abound. Reading the news in January is thus an exercise in incredulity – about the certainty the prognosticators declare about an inherently uncertain future.
Investing, like many aspects of our lives in 2017, has become global. The world has shrunk in ways that Ferdinand Magellan could never have imagined.
Since the Trump presidency began, we have watched the words out of Washington, DC with anxiety and rapt attention as well. There the gridlock is of a different sort. Both the House and Senate will (likely) be in recess for the month of August, but political infighting has prevented Republican lawmakers from moving forward with any sort of legislative agenda…