Call & Times

Keeping market volatility in perspectiv­e

- Christophe­r J. Bouley is vice president of Wealth Management at UBS Financial Services Inc., 500 Exchange Street, Ste 1210, Providence, RI 02903. He can be reached at 401-455-6716 or 800-333-6303.

In the midst of the recent market volatility, we took an Investor Watch Pulse survey of over 1,000 wealthy investors and business owners.

Their responses were consistent with our overall view that the markets are experienci­ng “growing pains,” but that the fundamenta­l picture remains solid. Over 80 percent felt that economic fundamenta­ls are solid, that the market dip is only temporary, and that we aren’t headed into a recession.

Moreover, despite market headlines inflation and operating costs didn’t register high among the list of “top concerns.”

And even though wealthy investors expressed more short-term uncertaint­y, they also voiced greater confidence in the long-term outlook. Optimism on the 12-month economic outlook dipped to 58 percent from 72 percent in January, but optimism over the 10-year horizon rose from 57 to 70 percent.

We believe that this bull-market correction provides an opportunit­y. In our survey, only about 10 to 15 percent told us they’d taken advantage of the pullback to put cash to work or increase their equity allocation­s. For investors that have been on the sidelines waiting for a market pullback to find a better entry point, this is a good opportunit­y for accelerati­ng dollar-cost averaging programs. And other investors should consider taking advantage of the recent market movements to rebalance their portfolios and find selective tax-loss harvesting opportunit­ies. Another one-third of investors plan to speak with their financial adviser about making adjustment­s – we think that’s a good plan.

The real story is that investors were somewhat spoiled in 2017, which saw a perfect mix of strong and accelerati­ng global growth, tame inflation, and extremely accommodat­ive monetary policy. Even though last year’s “disinflati­on” pressures are fading, this removes only one of the market’s tailwinds. The 2018 growth picture is even better, with both economic and earnings growth seeing broad-based accelerati­on – and central banks are continuing to normalize monetary policy but at a gradual pace that won’t derail markets or the economic expansion.

So we agree with our clients: despite the short-term market jitters, the fundamenta­ls remain solid. Our advice remains the same as it was in our 2018 Outlook report: keep calm and ride the bull.

 ??  ?? CHRIS BOULEY Vice President-Wealth Management UBS Financial Services
CHRIS BOULEY Vice President-Wealth Management UBS Financial Services

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