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Check out our 1Q2024 Market Review and Investment Outlook for 2024

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What If I Gave You the Headlines of 2020?

Picture yourself one year ago — on December 15th, 2018. The S&P 500 just took a sharp downturn. After being up 10% in September, the market went negative. And then, a fortune teller hands you the following headlines for 2019:

  • The Federal Reserve will reverse course and lower interest rates three times due to a weakening economy
  • The Yield Curve will invert
  • The U.S. will experience the longest economic expansion in its history
  • S&P 500 Earnings per share will be on pace to contract 1.5% from 2018
  • Global PMI (Purchasing Managers’ Index) for Manufacturing will contract (go below 50) for the first time since 2012
  • Articles of Impeachment against President Trump will be voted on by the U.S. House of Representatives
  • The Trade War with China will drag on and not get resolved by year-end
  • Two of the Democratic Party front-runners for President in 2020 will be self-proclaimed socialists Bernie Sanders and Elizabeth Warren

Keep in mind, these are events that actually happened. Add in the usual fear mongering from the financial media and you get what amounts to an all-out assault on “staying the course.”

What would you have done? Likely, you would have hit the SELL ALL button and waited for this disaster-of-a-year to end. Surely there will be a better time to invest! Even the most rational person would all but guarantee a down year for the S&P 500, if not a complete collapse.

That brings us to today. The S&P 500 is on pace for its best year since 2013. Better yet, every major asset class has outperformed cash this year, and a diversified portfolio of stocks and bonds is up double digits. It didn’t really matter what your investment strategy was in 2019, so long as you stayed invested.

JPM Guide through 11/30/19Source: JPM Guide to the Markets through 11/30/19

Too often I hear comments suggesting, “I know X is going to happen next year, so I need to do Y.” Did that strategy work in 2019? If I gave you the headlines for 2020 today — if I told you who will win the U.S. Presidential Election, when the trade war will end, or what GDP growth will be, what would you do with that information? Chances are very likely that you would make bad changes to your portfolio.

The bottom-line: Fear and greed are the two most damaging impulses to have while developing an investment strategy. And 2019 should serve as yet another lesson on the value of developing a solid portfolio strategy with the guidance of a professional financial advisor, and sticking to your plan.

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A.I.: Rise of the Markets

In the Terminator movie franchise, the third installment was titled Terminator 3: Rise of the Machines and continued the original movie’s theme of how the growth of Artificial Intelligence (AI) would ultimately lead to the end of civilization, as AI would discover that it no longer had need of humans. Fortunately, as AI is still in its infancy, the stock market is pricing in only the positive aspects of the technology. While graphic chips provider Nvidia (up 82% in Q1) has served as the poster child for Artificial Intelligence investments, many other technology companies (such as Super Micro Computer – up 255% in Q1) with some connection, or perceived connection, to AI rallied strongly in the first quarter. This led to an overall positive market sentiment throughout the period that lifted the S&P 500 and the NASDAQ 100 higher.

Ultimately, we believe the most powerful trend in AI will be the productivity enhancements experienced by many companies across a wide swath of industries. Read more about our thoughts on market trends and our look ahead to the remainder of 2024.

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Elvis Has Left the Building – Has the Fed Declared Mission Accomplished?

"Elvis has left the building" is a phrase that was often used by public address announcers at the conclusion of Elvis Presley concerts in order to disperse audiences who lingered in hopes of an encore.

With that in mind, we believe that Federal Reserve Chair Jerome Powell has strongly hinted that when it comes to the Fed’s rate-hiking cycle that began in March of 2022, Elvis (future rate hikes) has now “left the building.”

Read more about Senior Investment Strategist Dave Nolan's 4Q2023 market review and what may be ahead for 2024.

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Investing 101: It's Not Just a Man's World

As Socrates once said, “Awareness of ignorance is the beginning of wisdom.” If you recognize a lack of proficiency, don’t be afraid to educate yourself. Of course, we all know we can’t be experts on every topic, but gaining a basic understanding that will help you ask the right questions will benefit you in the long run.

Personal finance is no different. Dismiss the notion that "the world of finance is a guy’s thing” and become more proactive about learning the basics. It will truly benefit your personal financial freedom! Check out these basic Investing 101 terms.

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