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Market Update: Fourth Quarter 2019

The finish of 2019 was stark, and pleasant, in contrast to the same time period in 2018. Global stock markets enjoyed strong growth in Q4. Bonds had positive returns at the end of the year also, but saw the majority of their returns early in 2019. Nearly every major investment index had above average returns for the year 2019. 

Keeping all of that in mind, investors should not expect a repeat for 2020. In fact, very few people predicated high returns for 2019. Predicting short-term returns on investment markets is a rather fickle thing to do, and very few people do it well. The talking heads of financial media are predictably going to tell you about how stock markets perform in election years, as we approach November 3rd. Stock markets are typically up in election years. The US stock market is up most years though, so maybe we shouldn’t put too much credence in these factoids. Political preferences aside, the correlations between controlling party and stock market returns glean little insight for investing. Many of the pundits claimed that a Trump victory in 2016 would plummet the stock markets. That also proved to be incorrect. Below is a color-coded chart of the S&P 500 by presidential party in control of the White House. More than not the chart is going up; sometimes it’s red, sometimes it’s blue. 

Economic forecasts suggest that consumers in the US are still in good shape with a strong jobs market. Consumer spending makes up about two thirds of the economy. Additionally, the Federal Reserve and European Central Bank are showing that they will continue to be accommodating with policy. While there are no certainties in investing, these both suggest that we could continue to see the investment markets post positive returns. It would not be a prudent time to take extra risks. Revisiting your financial plan and keeping your assets invested for the long term are still the best suggestions.

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'The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.  It is a market value weighted index with each stock's weight in the index proportionate to its market value.
'Neither Asset Allocation nor Diversification guarantee a profit or protect against a loss in a declining market.  They are methods used to help manage investment risk.
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