The Market Abhors Uncertainty

“Every decade or so, dark clouds will fill the economic skies, and they will briefly rain gold.” – Warren Buffett

From an investor’s perspective, 2018 was a challenging year that began with a strong first half, only to encounter a sharp reversal and decline.  Looking back to the start of 2018, if we had known that we would end the year with no major military conflicts, a major tax cut, a revised trade deal with Canada and Mexico, 20%+ corporate earnings growth and unemployment at 3.7%[1], any rational investor would have predicted a strong market for 2018.  The reality is that with the Republicans winning the White House in 2016 while already holding a majority of votes in The House and The Senate, the market expected legislation favorable to businesses and lower taxes. Expectations drove the market gains we saw throughout 2016 and 2017. The volatility we are seeing now….is based on investor expectations (and fears) for the year ahead.