Early winter storm. Public Domain. Source: Max Pixel
November this year was the coldest and snowiest ever in the Northeast. In general, we try to prepare for winter early, cleaning the yard, raking leaves, splitting and stacking wood. But these early storms caught us a little off guard. In particular, I hadn’t changed to snow tires. Usually, putting them on by Thanksgiving and taking them off after tax day is good enough. But not this time.
Apparently, we weren’t the only ones. On a drive down I-95 in Maine during Thanksgiving week, I must have passed 30-40 cars off the road. Most of the folks had recently climbed out and were talking on their cell phones. There was a wrecker already there, systematically working down the highway, pulling folks out. But the damage was going to keep lots of auto body shops in business for a while! Early storms can be brutal, catching us before we’re ready, before we’ve had a chance to button things up and feel fully prepared.
Early season storm. Photo: Doug Tengdin
By contrast, no one should be surprised by the stormy markets we’re facing. The Fed has been raising rates for a couple years, so it should be no surprise when the Chair says they plan to continue to raise rates. The Trump Administration has been complaining about Chinese trade practices since he announced he was running for President, so we shouldn’t be shocked when they threaten and start to enact trade sanctions. Tech stock valuations have been elevated for a long, long time; we should expect them to come back to earth eventually. Trees don’t grow straight to heaven.
S&P 500 over the past year. Source: Bloomberg.
Living in New England, we should expect snow and ice. We love our seasons, the growth, the colors, the changes; but we ought to be ready when they turn. In the same way, we need to prepare for volatility in the markets. We don’t know the future. The unexpected will always be with us, but this should never be a surprise.
Douglas R. Tengdin, CFA
Charter Trust Company
“The Best Trust Company in New England”