The Week in Review: Performance updates from Cabana’s CEO – April 10, 2018

Market insight and a highlight of Cabana’s year-to-date performance:

Cabana’s seven portfolios range from “Conservative” to “Aggressive” and include an income strategy and an “Accumulator” portfolio. Performance is as of market close on April 9, 2018 and is presented net of maximum advisory fees and commissions.

All Cabana Portfolios were up over the past week, ranging from +.02% (Growth) to +1.69% (Accumulator).

Equity Markets continue to be remarkably volatile. We continue to see swings of greater than 1% in all major indexes daily. Between rising interest rates, trade tariffs, and U.S political uncertainty at the highest levels, “traders” have taken over for “investors” and are running the show. I saw an interview with legendary investor John Bogle this week. Mr. Bogle is the founder of Vanguard and has been investing professionally for more than 66 years. He was asked about this year’s extreme volatility and replied that in all his years in the markets he has never seen the sustained and violent moves in price that we are now seeing. To put that statement into context, he pointed out that he has lived through two 50% corrections, numerous 25% corrections, as well as the crash of 1987, when the market dropped 20% in a day. Wow! That is really saying something. The follow up question posed to him was, “So, what do you do in this environment?” His answer is as poignant as it is timeless. He stated, “Volatility is of interest to speculators, not long-term investors.” What Mr. Bogle is confirming is that long-term investors are only interested in what ultimately drives growth and corporate profitability. Those things are interest rates, which determine relative value among asset classes and earnings, which determine valuation of equity share price. These two fundamental factors are inherently interrelated. What long-term investors are not concerned with is price movement resulting from news, politics or general hysteria. These things can and do result in sometimes abrupt and severe market moves. They do not in and of themselves impact markets long-term, unless they are effecting interest rates and earnings downstream. It is those underlying changes that we watch for and respond to. For now, interest rates have stabilized and we anxiously await earnings season. We remain cautiously bullish.

Year-to-date net-of-fees performance:

CONSERVATIVE: -0.21%

MODERATE: -0.89%

BALANCED: -1.46%

GROWTH: -1.72%

AGGRESSIVE: -1.89%

ACCUMULATOR: -1.13%

ALPHA INCOME: -1.83%

Performance is presented net of the maximum advisory fees and commissions (2%). Numbers indicated with (+) for positive return and (-) for negative return.

-G. Chadd Mason, CEO

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