For those of us with children, we can recall dealing with those nights where our child was frightened by the dark and what they thought was under their bed. In the dark of night, it’s easy for a child to convince themselves that the Boogie Man is under them, lurking. The fear of what could happen can be overwhelming to them. Yet, we also know that once a little light is placed on the situation our children will feel much better when they realize that what is
actually
under the bed is not nearly as bad as what they
think
is under the bed.
As parents, we have great empathy for the anxiety of our children. No more so than when we, as adult investors, see and feel the distress associated with the capital markets as we did in the fourth quarter of 2018. Particularly, when the losses are so large, broad and unusual as they were in December. The last quarter was all of those things. The S&P 500 was down -13.5% in Q4. As a result, the S&P 500 was negative for the year with a -4.4% return. 2018 marks the first time ever that the S&P 500 posted a decline for the year after rising in the first three quarters. December, normally a month of good cheer and good returns, was Scrooge-like with a -9.03% return for the S&P 500 and was the worst December since 1931!
