Surprises, Silver Linings, and Staying the Course

It’s been a wild year so far.  A correction to start things off, Brexit, terror scares, a political coup, and a 1.36% yield on the 10 year Treasury to boot.  It’s been one surprise after another.  It seems nobody knows what to expect and investors everywhere are on edge.  But despite the turmoil, the markets may actually be the silver lining here.  Quite literally since silver prices are up more than 46% year to date!



In fact, markets across the board are up.  The S&P 500 is up better than 5% for the year and the Barclay’s Aggregate is up more than 6%. Emerging markets have been the strongest performing equity-wise, up more than 13% this year.

Those keeping track know I’ve been bullish on precious metals and emerging market equities for some time.   And while those positions were still widely unpopular just last year, it seems as though sentiment may finally be changing (market-timing has never been my forte).

The takeaway is not that I deserve a pat on the back, but to point out the importance of staying the course.  We’ve all been there before.  Looking rationally at the facts we see something that we just know is right, and yet we watch helplessly as the market drifts left.

At times like these, the importance of discipline cannot be overstated.  Even the most effective strategy becomes impotent if it isn’t executed consistently.  Whether it’s seeking out undervalued assets, trading the market’s swings, or maintaining a balanced allocation, don’t abandon your strategy just because it is being tested.

The market is inherently unpredictable and so it will continue to surprise even the best of us.  But when it happens just remember that if logic and reason continue to support what you’re doing, then stay the course regardless of what fickle markets and feelings may encourage.

Victor K. Lai, CFA

This blog is for informational purposes only. Nothing on this blog represents advice. Investing is inherently risky and involves the potential for loss.  Victor Lai is long ERUS and SIVR.