4th Quarter 2020 Market Commentary
- Investing in the stock market over time is better than investing in a U.S. President.
- Dividends and earnings are responsible for stock market returns over the long-term.
- A small number of stocks have contributed to the S&P 500 returns in 2020.
- The economy has improved however challenges (and opportunities) exist.
- The Unemployment Rate took 4 ½ years to improve to the current level after the last recession ended in June 2009.
- A vaccine(s) is the catalyst to continued economic expansion and higher stock prices.
2020 Market Update
(Updated June 10, 2020)
- The stock market is looking beyond the economic damage caused by the pandemic.
- Consumer behavior is being tracked to monitor the anticipated economic recovery.
- Timing the stock market has proven difficult. Some sophisticated investors have missed the rebound in stocks.
- Remaining invested and optimizing portfolios has been a prudent strategy.
2020 Market Outlook
- Federal Reserve is expecting no changes to interest rates (up or down).
- Recession seems unlikely except for some unknown “shock.”
- Low unemployment creates a challenge for businesses as they struggle to find skilled labor.
- Stock returns for the next 5 to 10 years are expected to average 4-6% per year.
- Bond returns are expected to return 2-3% per year over the same time period.
- Stock market volatility will likely be elevated due to the 2020 election cycle.
- Since 1928, the S&P 500 has gained +12.9% (total return) during election years when the nation’s sitting president ran for re-election. Since 1928, the S&P 500 has gained just +4.5% during election years when the sitting president is not seeking reelection.
4th Quarter 2019 Market Commentary
- Consumers continue to drive economic growth.
- YTD and one-year market returns look very different.
- We continue to stress importance of using proper risk in your portfolios.
- Geo-political events cause short term market volatility that historically recovers in a matter of weeks, depending on the severity.
- Economic growth in 2019 is still in line with annualized gains experienced since the economic recovery began in 2009.
3rd Quarter 2019 Market Commentary
- June was an historic month for stocks!
- U.S. economy is slowing but growing.
- Corporate profit growth is expected to contract for the first three quarters of 2019.
- The Federal Reserve is expected to lower interest rates this year.
- Recession risk is widely discussed but likely avoided in the near term.
- This month marks the longest U.S. economic expansion on record.
2nd Quarter 2019 Market Commentary
- The US is currently experiencing the longest economic expansion since World War II.
- As of March 31, 2019, the S&P 500 had its best quarterly performance since 1998. This follows December 2018 that was the worst December for the US stock market since 1931.
- The US economy grew 3 percent in 2018 and is expected to slow but grow in 2019. Expectations for inflation are relatively low despite a strong labor market.
- A US-China trade agreement, Federal Reserve interest rate policy, US corporate earnings, Brexit and global economic growth are some of the primary uncertainties that continue to affect daily market sentiment.
- We have recently reduced or eliminated small cap stocks, natural resources and some international exposure to reduce volatility and ideally provide better downside protection if a meaningful correction occurs in the equity market.