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Last year, global stocks (except in Canada) did a slow grind higher all year without any pullback of more than 3%. This pushed many stock markets to record highs but it also drove stock valuations close to record highs, and it occurred while interest rates were increased three times in the U.S. and twice in Canada. Despite only mediocre economic and profit growth and all of the turbulence around the new government in Washington, stock market volatility (a traditional measure of investor fear or trepidation) moved to record lows and stayed there most of the year. Many money managers, ourselves included, had expected a stock market correction at some point last year given rising interest rates, high stock valuations, excessive investor optimism and the abnormal length of time without a correction. We carried those same expectations into 2018, heightened by an even harsher interest rate outlook and growing budget deficit projections in the U.S. But then stock market investors again ignored those risks and bought stocks at the most aggressive rate seen in three decades, except in Canada where weak energy stocks once again held back the overall averages. (more…)