“More money has been lost trying to anticipate and protect from corrections than actually in them.”
-Peter Lynch- 

As the first half of 2018 draws to a close, the global expansion continues to gain momentum. The U.S. economy seems to be poised for continued growth, while conditions in Europe continue to improve. Low interest rates and modest inflation provide the catalyst for developed economies to advance.

But caution abounds. Europe continues to wrestle with Brexit and what may be an uncertain future for the European Union. In U.S. markets, equity valuations continue to rise and are now priced for perfection. The Fed is also continuing to raise interest rates, moving toward normalization and away from its highly accommodative policy. As rates continue to rise, volatility will almost certainly intensify, as investors assess the “new” normal.

The attached mid-year summary, drafted by the Capital Group, manage of the American Funds, takes a reflective look on what has transpired in the first half of 2018 and what we may face in the second half of the year. The consensus – volatility will increase but recession is not knocking on our door, at least not yet.

If you have any questions or comments, please let us know.

 

 

 

 

 

 

Peter Lynch is the former manager of Fidelity’s Magellan Fund