Insight Blog

Market Turbulence and Central Bank Policy Shifts

Litman Gregory’s Chief Investment Officer Jeremy DeGroot shares his thoughts on the uncertainty of what will happen to the equity markets as the era of “easy money” ends, and he explains how economic indicators help identify where we are in the economic cycle.

Our Thoughts on Recent Market Turbulence

The stock markets’ abrupt dives so far in February have caused the S&P 500 to give back all of its 2018 gains. While these market drops can be disconcerting, they are a common occurrence in investing; the extended calm that preceded this volatility was the anomaly. We remain confident in our portfolio positioning and our clients’ ability to weather periods of uncertainty like this one.

Year-End 2017 Market Review

U.S. stocks capped off another stellar year, with the current market rally reaching historical milestones. In 2017, our portfolios generated strong absolute returns and continued to benefit from their overweights to foreign stocks and actively managed, absolute-return-oriented bond funds.

Year-End 2017 Investment Commentary

We remain confident in our diversified portfolio positioning looking ahead over our long-term investment horizon. Financial markets were strong in 2017 and the macro outlook is positive. Unprecedented central bank policy shifts could trigger increased volatility, but that’s all the more reason to stay disciplined and patient.