Q4 2019 Market Review & Commentary
Happy New Year!!!
With 2019 closing with an S&P 500 index up 28.88%, the holidays were healthy and happy for many. The 2018 S&P 500 performance (down 6.24%) was no match for this past year. What changed? 2019 was punctuated by very favorable and low interest rates. On the whole, earnings have been good, and Phase I of the U.S./China Trade Deal seems to be in place. There were some bumps along the way in 2019, but the market demonstrated amazing resilience. Technology and Finance led the way throughout the year, more specifically, Semiconductors, Credit Services, Aerospace/Defense, Electronic Equipment, and Diversified Machinery, as well as a strong U.S. Consumer.
As we come barreling into 2020, earnings are the first and most meaningful measures of the health of the market. As companies begin to report their earnings with the banks in the fore, much of the focus on trade optimism in 2019 will likely be short lived. Our growth has slowed overall as evidenced by the Institute for Supply Management Manufacturing Index missing consensus estimates. There are contrary indicators to this number and the consumer is still very strong. Therefore, we believe that if you couple slower overall improving growth with this being an election year, a high single digit return for the market seems reasonable. Therefore, if you are allocated in U.S. stocks and companies with good long-term prospects and reputations, stay with them. It might also make sense to use this year as a chance to diversify a little and take some of the volatility out of your portfolio. We would not be overly aggressive buyers of the American markets at this time. Finally, keep some money dry for a rainy day, and be happy and feel joy that 2019’s supposed recession did not materialize!
As always, if there are any changes in your personal financial situation, please keep us apprised. We will be meeting with many people as the new year begins. Be well and God speed the plough.