2019 First Quarter Review…. Keeping Calm & Moving On

Well that turned out well.

Just three months ago financial markets were in free fall. Primarily due to three obstacles to our growing economy;

1) A shutdown of the Federal government.
2) A Federal Reserve determined to raise interest rates
3) A trade war with China

While the trade war continues, items one and two were resolved the by the normal course of events for such problems (for item #1 one branch of government blinks, and for item #2 financial markets swoon).

So what did we learn?

First the obvious; that during a trade war trying to raise rates and shutting down the government is a bad idea. Three strikes and you’re out, so to speak.

Maybe the stock market would have remained calm if just two of the three had occurred, though in hindsight I doubt it. Thirty plus years as a professional investor haven’t taught me as much as I would like, but this much seems clear…. Markets are prone to panic. It’s almost as if some investors just like to lose money. People buy at tops and people sell at bottoms. So do their computers. Why? Because it’s human, it’s what people do. Apparently it’s what computers do as well.

As for the trade war with China; While this clearly can’t be good for some (especially our grain and hog producers here in Iowa), it’s not as short term recessionary as some feared and just as clearly not affecting stock prices. Why…. We haven’t learned why yet. Leaves us humble, not knowing, gives us reason to pay attention, and gives us a reason to get up in the morning.

As for long-term investors not prone to panic, those willing to keep calm and move along, the first quarter of the New Year treated us pretty well. Once again proving the most useful of investing maxims; the best way to get the long-term returns available in financial markets…. is to be a long-term investor.

As for what comes next, we don’t know. At Iowa Wealth Management that’s the reason we get up each morning.