Going back to January 1, 2008 until January 1, 2018, 10 years or 40 quarters the market was up 75% of the time. Breaking this down specifically over this 10 year period the market was up 30 quarters and down 10 quarters. What’s interesting about this data point is if one goes back another 10 years and another 10 years the numbers are very similar.

I think this is an important data point to consider and should bring comfort to investors. After all, the stock market has had positive returns for the previous 8 to 10 quarters and the last few years.

So, as we enter 2018, it is not surprising that volatility is back and we may be looking at a few quarters of subpar returns. Should we sell everything and run for the hills and get back in later? Should we try to time the market and see if we can be a winner during this possible 20 to 30 percent period? The answer to both of these questions is clearly “no.” So then, how should we navigate these periods of possible negative returns?

We should be much more selective about both what we buy and when we buy it. One possibility may be to look for companies that pay dividends. Companies that pay dividends tend to hold up better during flat to down markets. Secondly, we may consider harboring some cash, so we can add to existing positions when they go on sale.

It’s really too early to tell whether this sudden first quarter 2018 volatility, after years of a quiet upward sloping market, is going to push us into a period of difficult returns. If it does, be patient and please remember the 70 to 80 percent rule. Some of this new volatility may be politically related. Although, remember stock prices are driven by earnings and the forecast for the figures coming out in the April/May period is very good. So, as I mentioned last quarter, I remain cautiously optimistic.