2018 – A year of volatility

The Straits Times Index (STI) reached two peaks over the course of 2018.

3,609.24 points on 24 Jan 2018
3,615.28 points on 2 May 2018

2018 started with STI at 3,402.92 points. After May 2018, it was on a downward spiral. It was at 3,115.52 points yesterday (6 December 2018). This was a drop of 8.4% year-to-date.

Back in February, ex-Chairperson for Federal Reserve (Fed) Janet Yellen said that the stock market valuation was high. On 6 February 2018, the Dow Jones Industrial Average (Dow) was at 24,912.77 points. The Dow went on to touch new high at 26,828.39 on 3 October. Since then it was brought down to 24,947.67 points (6 December). The Dow was back to February level when the warning by Janet Yellen was made.

2018 was that volatile reaching new levels before coming down hard towards the end of 2018.

2018 belongs to Donald Trump and his trade policies for US. The policy of trade tariffs on China export to US is one main cause of the poor sentiments of the investment markets. The other is Fed increasing benchmark interest rates to remove accommodative monetary policy of US since the global financial crisis (2008/09).

The other factors causing volatility was oil prices and Brexit outcome.

Oil prices reached US$82 per barrel for Brent Crude on 25 September and then declined sharply in November to now trading at US$53. (-35.3%). The outcome of Britain leaving European Union (Brexit) hangs in a balance. UK Prime Minister Theresa May is trying to clear the UK parliament with the Brexit deal she negotiated with EU.

Looking back my earlier posts in 2018, I started to feel uncomfortable since February. Lesson learned was that stock markets gyrate with politics of nations. To stay with cash would have been a wise decision. It is almost impossible to time the market for investments or even selling them with this kind of market volatility.

Copyright © 2018, limkimtong for Living Investment

The material presented is intended to be general and written in layman’s language as much as it is possible. The author shall not be liable for any direct or consequential loss arising from any use of material written. Please seek professional advice from your financial advisor or financial institutions on material written covering financial matters.

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