market commentary
market commentary
By Bob Barber, CWS®

The first quarter of 2018 is now behind us, and what a wild ride it was! Don’t fret, the markets have done this many times before, only to go on and close at newer highs by the end of the year.

“Volatility is the price of good returns”

It is important to remember in looking at returns that volatility, and sometimes major volatility, is the price one has to pay for good long term returns.

Here is an interesting parable I heard a few weeks ago about investing. If you were asked to give the distance from your home to a place you frequently visit, like your workplace or local grocery store, you could probably name the distance in miles. But, if you were asked to share the same distance in inches, I doubt you would know that number since inches are not the rate of measurement used for long distances. In a similar way, for measuring market growth you need to use a longer measuring unit (3, 5, and 10 years depending on your investment objective) to get the best perspective on accurate performance metrics.

Here is some recent history where months/ quarters have gone by without any return in the S&P 500 index, only to end the year on a positive note:

Date | S&P 500 index closed at:

03/26/2012 – 1408
08/06/2012 – 1405 (4 months later no return)
12/31/2012 – 1466 (Ended positive)

05/13/2013 – 1667
09/03/2013 – 1655 (3.5 months later no return)
12/30/2013 – 1831 (Ended positive)

06/30/2014 – 1985
10/13/2014 – 1886 (3.5 months later no return)
12/29/2014 – 2058 (Ended positive)

08/01/2016 – 2182
11/14/2016 – 2181 (3.5 months later and no return)
12/22/2016 – 2238 (Ended positive)

01/02/2018 – 2695
03/29/2018 – 2629 (3 months later and no return)
12/28/2018 – ???

All these stats of the S&P 500 index may be confusing, but they point out that what is happening today is no different than what has happened many times in the past. I have a 90 year stock chart in my of office showing many times there have even been multiple years the markets had no returns but not a single decade has passed since the 1940’s without being positive. So as we closed out the first quarter on 3/30/18, we were down (less than 2% on average for our fee-based managed accounts), but let us not forget that it is normal for the markets to act this way in the short term.

A book I would highly recommend reading during times like this is called The Emotional Investor by Jay Mooreland. We always have many copies on hand, so if you are a client of our services and would like us to send you one, let us know. In the meantime, we have also included our chart called “The Cycle of Market Emotions” (see below) that we refer to often as emotions are the one thing that can hurt returns almost more than anything.

In closing, I’m including “Key Takeaways” from page 76 of The Emotional Investor:

“Recognize the media uses tactics to get you to tune in, and those tactics may influence you to think and act based on short-term outcomes. Additional information (such as today’s news and stock quotation) is not always of value and may be detrimental to your portfolio.

If you are influenced to make a change, ask yourself, “Where did this idea originate?” If it originated from the financial media, viewer beware. Discussing your decisions with a trusted third party (such as a financial advisor) before acting on them may help improve your decision-making process.”

Have questions? Please don’t hesitate to call the office and speak to myself or Nathaniel at 830-609-6986 or set an appointment online by going to We are here to guide you during volatile times like this and take the emotions out of making good decisions.

cycle of market emotions


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