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China’s Equity Markets China had a tumultuous quarter. The economy continued to slow, growing 7% in the first quarter, the slowest in six years. Some analysts are concerned that what happens in the Shanghai stock market may not stay there.

The Shanghai Composite which was a rising star for the last year is off nearly 22% from its peak in mid-June, including a 3.3% fall on June 29th. China’s interest-rate cut on the prior weekend did little to restore investor confidence.

The Chinese government has been pulling a number of levers to try to stimulate the economy. Despite this uncertain growth picture, the Shanghai SE Composite Index which has fallen 7.3% in the last month, has gained 14.1% in the last three months, and 32.2% for the year to date. (Source: Morningstar.com 7/1/2015)

Conclusion: What Should an Investor Do?

Investors are concerned about return. After all, the market has been up. On June 24th, in an article entitled Will the DJIA hit 16,000 or 20,000 first?, Nicholas Colas the Chief Market Strategist for Convergex noted that the Dow Jones Industrial Average was up 324 points for the year to date – which meant an increase of 1.8%. Although there are 30 companies in this oldest of all broad market measures, just 2 names made up all that performance. Goldman Sachs was up 12% year to date, adding 174 points to the Dow and UnitedHealth’s 21% return was worth another 164. You’d think it would be the other way around, but GS’s higher stock price gives it a heftier weighting. The other 28 names in the Dow netted out to zero impact for the year. (Source: www.convergex.com)

The first half of 2015 was not easy for investors. As

advisors we are faced with the tough task of balancing portfolios between risk free rates, risk premiums and market returns.

So what can investors do?

Safety comes with a price. Rates on longer-term certificates of deposit got a small bump in Bankrate.com’s June 24 survey of interest rates. The average one-year CD yield was 0.27% for the 15th straight week. The typical five-year yield was up 1 basis point to 0.87%. A basis point is one-hundredth of 1%. Jumbo CDs sport slightly higher yields for a $100,000 deposit. The average one-year jumbo CD yield was 0.3% for the seventh consecutive week. The average five-year CD yield was up 1 basis point to 0.92%.

For the 37th week in a row, the average money market account yield was 0.09%. (Source: www.bankrate.com)

For many investors, these low fixed rates will not help them achieve their desired goals. Most investors attempt to build a plan that includes risk awareness. Many times this can lead to lower but safer returns. Traditionally, bonds have been the defacto standard to hedge against market risk, but with bond values at historical highs they no longer offer the kind of protection they once did and quite possibly pose a greater threat of loss than stocks. Investing is not about keeping pace with the market (who likes losing 40% during years like 2008?) or beating the market – it’s all about hedging risk so your portfolio suits your individual needs regardless of the market.

Have a Strategy. Investors need to be prepared. Market volatility should cause you to be concerned, but panic is not a plan. Market downturns do happen and so do recoveries. This is the ideal time to ensure that you fully understand your time horizons, goals and risk tolerances. Looking at your whole picture can be a helpful exercise in determining your strategy.

Focus on your own personal objectives. During confusing times it is always wise to create realistic time horizons and return expectations for your own personal situation and to adjust your investments accordingly. Understanding your personal commitments and categorizing your investments into near-term, short-term and longer-term can be helpful.

Make sure you are comfortable with your investments. Equity markets will continue to move up and down. Even if your time horizons are long, you could see some short term downward movements in your portfolios. Rather than focusing in on the turbulence you might want to make sure your investing plan is

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