Garrett R. D'AlessandroChief Executive Officer | Feb. 6, 2018

Market Volatility No Cause For Alarm

Market volatility is normal and expected

Our position is to stay invested in and overweight U.S. growth, U.S. high dividend and income equities, and emerging markets Asia

We will look to deploy current cash positions to get clients invested back into their strategic asset classes

During major market moves, it’s natural for investors to question their investment strategy, but one of the benefits of professional management is decision-making based on facts, not emotions. Market volatility like this is normal and expected. And given that there is low recession risk, recent market events do not change any investment or portfolio allocation for our clients at this time. City National Rochdale’s 2018 Economic Outlook for the year is “Navigating the Global Cross Currents,” and that is what we are seeing play out. We fully expected a correction like this and are not alarmed because we see there is low risk of a recession ahead. Simply put, bear markets outside of recessions are rare.

Our position is to stay invested in and overweight U.S. growth, U.S. high dividend and income equities, and emerging markets Asia. We continue to stay overweight in non-investment grade credit. A correction like this can run further, but also provides an opportunity when stocks and non-investment grade bonds become attractively valued, to bring client portfolios closer to their long-term strategic objectives. We will look to deploy current cash positions to get clients invested back into their strategic asset classes.

There are always many reasons for a correction, but our decades of experience over many market cycles tells us there are justifications for it. One contributing factor was the impact of strong U.S. economic growth on rising interest rates. We think that after a quarter or two, growth will normalize and not cause interest rates to rise too fast or too high to trigger a recession.

Nothing has changed in our outlook for company earnings, or for the economic growth outlook, and none of the fundamentals have changed. So, when fundamentals have not changed, stock prices will correct when they get too far ahead, which was clearly the case after last year’s unsustainable 21.83% return and a 5.73% one-month return in the S&P 500.1 Our best advice is to rely on your long-term and tactical strategy being well-positioned for where we are in the economic expansion and focus on the long-term earning power of your investments.

In the meantime, your team at City National Rochdale will continue to monitor the market developments and make sure you continue to stay on track to reach your investment goals.

Key Points

Market volatility is normal and expected

Our position is to stay invested in and overweight U.S. growth, U.S. high dividend and income equities, and emerging markets Asia

We will look to deploy current cash positions to get clients invested back into their strategic asset classes

Important Disclosures

The information presented does not involve the rendering of personalized investment, financial, legal, or tax advice. This presentation is not an offer to buy or sell, or a solicitation of any offer to buy or sell, any of the securities mentioned herein.

Certain statements contained herein may constitute projections, forecasts, and other forward-looking statements, which do not reflect actual results and are based primarily upon a hypothetical set of assumptions applied to certain historical financial information. Certain information has been provided by third-party sources, and although believed to be reliable, it has not been independently verified, and its accuracy or completeness cannot be guaranteed.

Any opinions, projections, forecasts, and forward-looking statements presented herein are valid as of the date of this document and are subject to change.

All investing is subject to risk, including the possible loss of the money you invest. Past performance is no guarantee of future results.

Investment management services provided by City National Bank through its wholly owned subsidiary City National Rochdale, LLC, a registered investment advisor.

Index Definitions

The Standard & Poor’s 500 Index (S&P 500) is a market capitalization-weighted index of 500 common stocks chosen for market size, liquidity, and industry group representation to represent U.S. equity performance.

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