FCWS View December 2018 | Outlook: Cautiously Positive
Tuesday, 04 December 2018
Our Risk Odometer remained stable at +4 this month and the current outlook remains as “Cautiously Positive”. Despite the modestly high Odometer reading, many of the indicators sit near inflection points and could quickly turn from positive to negative. This means our outlook could easily change in the coming months.
Intra-month, the Risk Odometer had dropped to +2 but recovered to +4 by month end following a sudden market turn-around at the end of November. It is key during these inflection points to monitor incoming data and remain objective. Recently, markets have moved with unprecedented speed and velocity and this can elicit many emotional responses. In these environments it is best to divorce yourself from those emotional responses and have a plan for dealing with unavoidable aspects of the markets. Ideally, these plans are disciplined and objective. This is the objective of our Risk Odometer, to provide a disciplined and objective approach and avoid emotional responses. It will never be perfect, but it will provide a structure for removing emotions from challenging decisions.