If your phone or your inbox has ever lit up because of market volatility, you know that it helps to have talking points ready when clients ask questions. The problem is, how do you decide which topics to focus on?

China? Inflation? Deflation? Valuations? Federal Reserve’s actions?

As I’ve said before, specific events matter far less than trends in economic and market conditions in determining market performance.

So if you’re looking for a few points to share with clients, here’s my cheat sheet on what really matters in today’s markets and economy:

(1) We’re living in a low-growth world. Global GDP grew at a compounded annual rate of 3.8%, on average, from 1950 to 2014. I believe policymakers are likely to face difficulties achieving a 2% inflation rate in the medium term. As I said on Twitter in September, there’s an upside:

(2) China is the biggest contributor to slower global economic growth. The country remains an economic engine for the world but is winding down years of excess investment. Based on internal indicators, China could be experiencing annual GDP growth as low as 5.0%, despite its announced annual rate of 6.9% for the third quarter of 2015. In September I Tweeted:

Similar to investing in other emerging markets, investing in China involves idiosyncratic risks as the country continues integrating into the global financial system, but in the long run, an allocation to Chinese stocks can represent a meaningful portion of a globally diversified portfolio.

(3) In China and elsewhere, many investors are focused on central banks’ monetary policy. This focus is well placed, but it draws attention away from a potentially more important issue: structural reform.

China, Europe, and Japan must continue implementing market-based reforms so investment capital can be allocated efficiently and support growth.

(4) Due in part to the low-growth global environment, the Fed is likely to raise its target for short-term rates gradually, eventually increasing the rate to a level lower than the average rate we have seen historically. My Tweet below highlights another factor that may contribute to a relatively low rate at the end of this monetary tightening cycle:

Although low interest rates could endure for a long period, I continue to believe a globally diversified portfolio incorporating an allocation to fixed income can provide ballast in clients’ portfolios during periods of market volatility.

(5) The long-term nature of our low-growth world leaves me guarded, but not bearish, about investment returns. In an environment of ultralow interest rates, compressed risk premiums, and high equity valuations, clients will have to remain patient since their portfolios may experience lower returns. For the last 30 years, investors in a 60% stocks/40% bonds portfolio earned a return of 9.8% a year, on average. However, today our long-term-return forecast looks more like this:

The bottom line: Advisors can help clients reset long-term expectations. Clients should also consider ways to save and invest more to compensate for possibly reduced investment returns.

(And just in case you didn’t get the hint, Twitter is a great way to find the latest thinking of Vanguard thought leaders on markets and the economy. Just follow  @Vanguard_FA.)

Notes:

All investing is subject to risk, including possible loss of principal.

Investments in stocks issued by non-U.S. companies are subject to risks including country/regional risk and currency risk

Stocks of companies based in emerging markets are subject to national and regional political and economic risks and to the risk of currency fluctuations. These risks are especially high in emerging markets.

Diversification does not ensure a profit or protect against a loss.