March Market Note – Just a bit off the top

Just a bit off the top

Although it may sound counterintuitive, cutting your hair can actually promote growth.  They say that as you get rid of split ends and damaged hair you actually help growth.  Of course, it should be understood, that you should also maintain a healthy lifestyle and a balanced diet.  Long-term follicle health needs nutrients. If you fail to eat healthy and take care of your hair, there is no silver bullet.  No shampoo, oil, laser or lotion will help.

The markets gave us a bit of a trim at the beginning of February.  As inflation began to creep into the metrics, interest rates moved higher and markets moved lower. Investors were a bit surprised with this sudden spat of volatility, as 2017 was very calm.  Technical trading as well as Exchange Traded Notes (ETN’s) that shorted volatility exacerbated the decline.  The markets have been strong for some time now as the global economy has improved.  We have a bit of a double-edged sword, global growth can lead to inflation as wages and input prices start to creep upwards.

Dow Jones Industrial Average (One Month Chart)


Guess who’s back, back again, volatility is back, tell a friend

Looking at the intra-year declines from 1979 through 2017 we can see that volatility has always been present and large swings to the downside do not necessarily lead to a down year in the market.  The chart below shows that the average intra-year decline was about 14%.  Yet despite those drops, the calendar year returns were positive in 32 out of 37 years in the sample.  So volatility is back, but that may not be a bad thing.

US Market Intra-Year Gains and Declines vs. Calendar Year Returns, 1979-2017

In US dollars. US Market is measured by the Russell 3000 Index. Largest Intra-Year Gain refers to the largest market increase from trough to peak during the year. Largest Intra-Year Decline refers to the largest market decrease from peak to trough during the year. Frank Russell Company is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes.

Interest rates

2018 has been a good year for savers as interest rates have trended higher.  The 10-year Treasury bond is close to 3.00%, a level not seen since 2014.  While the move has been dramatic from the lows in 2016, the rate is far from historic norms and still quite low.  We anticipate the Fed will move rates on the short end, roughly three times this year.


The final cut

As Fran Lebowitz said, “You’re only as good as your last haircut.”  The February haircut occurred in a strong economy and a market with strong fundamentals, all things equal, a good time for a haircut.  Earnings have been strong and we have yet to see the impact of the corporate tax reduction.  We anticipate this year will have more volatility than last year.  The Fed will continue to move short-term rates, but we do not believe they will be overly aggressive as they do not see inflation (currently) as a threat.  Bumpy markets will test your mettle and it is always a good idea to review your risk tolerance.  We thank you for your continued support and wish you a Happy March Equinox.







Morgan R. Christen, CFA, CFP®, MBA
Chief Executive Officer


* Past performance is not a guarantee of future results. Indices are not available for direct investment. Index performance does not reflect the expenses associated with the management of an actual portfolio. CPI data are available from the US Bureau of Labor Statistics. Stock is the capital raised by a corporation through the issue of shares entitling holders to an ownership interest of the corporation. Treasury securities are negotiable debt issued by the United States Department of the Treasury. They are backed by the government’s full faith and credit and are exempt from state and local taxes. The indices are not available for direct investment; therefore, their performance does not reflect the expenses associated with the management of an actual portfolio. Past performance is no guarantee of future results, and there is always the risk that an investor may lose money. Diversification neither assures a profit nor guarantees against loss in a declining market. The information contained herein is based on internal research derived from various sources and does not purport to be statements of all material facts relating to the securities mentioned. The information contained herein, while not guaranteed as to the accuracy or completeness, has been obtained from sources we believe to be reliable. Opinions expressed herein are subject to change without notice. DJIA chart courtesy of  10 year Treasury chart courtesy of Clip art courtesy of


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