What Does the First Half of the Year Tell Us About What’s Coming?

By Kyle Thompson via Iris.xyz

“If investing is entertaining, if you’re having fun, you’re probably not making any money. Good investing is boring.” – George Soros

The above quote is a fitting summation for the first half of the year. In Q1, volatility returned due to trade-war fears and tensions with North Korea. These factors drove down the major broad indices for both equities and fixed income. Our Commentary last quarter focused on the need to remain disciplined and highlighted the disconnect between the downward market performance versus the strong economic data. Investors that remained disciplined in Q1 were rewarded this quarter with reduced volatility and advances in the major US indices.

The Market Street philosophy is to remain disciplined and committed to sound long-term investing principals through all market cycles. This discipline has enabled us to remove the emotional aspect of investing, which in turn has served our clients well over the years. Irrational investors would likely tell you the first half of the year was a volatile ride with many ups and downs.

In contrast, we would argue the first half of the year was rather boring with modest market advances. In the words of George Soros, good investing is boring, and clients have continued to see their portfolios grow through the first half of 2018. The table below summarizes index returns for the second quarter, the past 12 months, and annualized returns for the past 3-year period for some of the major asset classes.

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