We have seen this before......

We are witnessing the worst first quarter performance in 40 years. For many people, this feels like the end of the world, especially following year after year a stable uptrend and people are used to a market that seemingly never went down. All the sudden, it keeps going down, even 5 days in a row continuously. Well is the end?

Well, if you don't remember or are too young, here is the thing: what we're seeing in the markets right now is something that we've seen before. More specifically, there is a strong similarity between what is happening now and what happened in the fourth quarter of 2018. As a reminder, starting in 2017, the Federal Reserve began a series of seven straight Fed Funds rate hikes, of 25 basis points each, leading into the 2018 mid-term elections. This, not surprisingly, caused the Nasdaq to decline 23% in the fourth quarter. It really seemed to be well planned, especially considering what happened next. After the series of rate hikes, the Fed completely reversed course and pulled the Fed Funds rate down to basically zero in less than a year. 

If the history repeats itself or even just rhymes, we may likely see something similar to happen again this time. I still believe the Fed can be very loud in voice but very limited in action. I seriously doubt they can raise interest rates much at the end before they start to pivot again!  

Don't Let Emotions Control Your Investing (by Lance Roberts)

As Bob Farrell's rule number-9 states:

"When all the experts and forecasts agree – something else is going to happen.

As a contrarian investor, excesses get built by everyone being on the same side of the trade. Currently, everyone is so bearish that the reflexive trade will be rapid when the shift in sentiment occurs.

As Sam Stovall, the investment strategist for Standard & Poor's, once stated:

"If everybody's optimistic, who is left to buy? If everybody's pessimistic, who's left to sell?"

The takeaway from this commentary is not to let media headlines, financial narratives, or concerns over long-term issues like valuations, economics, or geopolitical events impact the decision-making process in your portfolio strategy.