Volatility vs Cash Flow
Gyrating markets are here.
Entering 2015, we advised clients to expect more volatility after a prolonged quiet period. Later, when the Greece snap elections and China devaluation occurred, we suggested China developments are and will remain more important—specifically as to the extent it impacts corporate profits growth—which we monitor.
The U. S. economy is largely driven by us—U.S. consumers. Currently, it is growing 2-3% with steady employment trends, inflation in check, cheap gasoline, and confidence is high.
Moreover, policymakers have no intention to aggressively raise interest rates. In previous blogposts, we used the term “glacial” to highlight the pace of expected tightening.
What does it mean to me, the client? While these periodic volatility episodes impact stock and bond prices, it does not upset an investing plan providing cash flow from quality assets to fund your lifestyle.