Most likely you have a good handle on how stocks and other equity investments work: Your stock shares represent a portion of ownership in a company and if the company prospers and the stock becomes more desirable, the value of those shares increases. If the company encounters financial trouble, your stock can lose value. Bonds and other “fixed income” securities are an entirely different type of investment.

The first quarter of 2018 brought increased volatility, negative returns in most asset classes, and trade war fears that have threatened to derail the upward momentum in stocks and interest rates.

We have been counselling our clients to try to ignore politics and geopolitics when they consider their investment strategy. Instead, we have said, pay attention to the fundamentals, the strong economy, and impressive corporate earnings.

As the second longest economic expansion on record in the United States entered another year, questions around potential catalysts for greater gains arose. With economic data still solid, and the effects of the corporate tax cut not yet fully felt, the case for equities remains intact.

A strong U.S. economy, continued global growth improvement, a concerted effort by global central banks to remain accommodative as long as possible, and a general sense of complacency about valuations in the equity markets provided the backdrop for 2017’s wins.

As January began, it was clear that 2017 was going to be a tough act to follow for investors. It was a year marked by historically low volatility, essentially unchanged Treasury yields, and a straight up trajectory for equity markets, and as such, it seemed unlikely for this Goldilocks scenario to repeat itself again in 2018.