Today marked another day of pretty shocking volatility. The market seemed like it was finally rallying after a brutal first half of December, but those hopes were rather unexpectedly crushed. Kind of like getting a wrapped Christmas present only to later find out that all you got were socks. And not even the comfy kind. The overall volatility on the day was likely caused by a combination of Wall Street’s reaction to the budget bill, institutional investors covering short positions, and alternating optimism / pessimism about the close of tomorrow’s Fed meeting.
Tomorrow might be the last chance to see any rally in 2018 when the Fed posts its minutes (commentary) at around 11AM PST. (The only other event that could turn this market around is some sort of resolution to the US / China trade tensions, but don’t expect to see that in 2018). The current sentiment is that the Fed will follow through with its previously broadcasted intentions to hike rates in December, but soften the 2019 approach (from three hikes to two hikes). If this is the case, expect to see a rally. But we won’t know until we know, so get ready for perhaps another wild ride. I will continue buying total market ETFs, especially while they remain at a “discount”, but no one can say for sure what kinds of gains or losses we might expect in the coming weeks or months. Stay disciplined, and invest wisely.