My, how time flies! As we imagined 2019 from 30, 40, or 50 years ago we always thought we would see flying cars! Instead, we have drones that annoy us and smartphones that rule our lives.
There have been many positive developments over the past 2 or 3 years. We are very happy with the economic results we are seeing, such as unemployment at long- term lows and GDP (gross domestic product) growing again for the first time in over a decade. Consumer confidence is at long-term highs, and something new… wage growth for the first time in 18 years!
2018 turned out to be a slightly negative year for the markets, the S&P 500 and the Dow Jones Industrial Average were down 4.4% and 3.5% respectively. This is a mild downturn as far as negative years go. When looking only at the 4th Quarter in 2018 the downturn is much sharper and of course that is where the media focused the attention.
As I mentioned in the Ryan Report/Market Update dated December 20th, 2018, there is good news in the small loss in 2018. The good news is that we have now had our correction, we have now had our down year, we have now had our bear market. Nobody will be able to make a credible case that we have gone straight up or have gone too high for too long. This gives the market a good reset and makes new all-time highs in the future more likely. The down year of 2018 and the sharper loss in the 4th quarter are normal macro bull-market patterns.
The markets were clearly reacting to uncertainty on the trade and tariff discussions and the seemingly inflexible and hawkish comments made by Federal Reserve Chairman, Jerome Powell, during the 4th quarter of 2018. Even with the markets being anxious about Federal Reserve policy and trade relations going forward, this does not mean we are headed toward a recession. Jerome Powell and his hundreds of Ph.D. level economists certainly don’t see weakness coming.
One theme that I noticed in the media reporting about the stock markets in the fourth quarter is this wild and unfounded catastrophic atmosphere. The typical culprits were at work. The news media, the dark apocalypse gurus, the gold/precious metal promoters, and the fixed annuity/life insurance industry were all out there signaling catastrophe!
“The world is ending, the markets are crashing, a recession is coming, Buy Our Products!”
As you are certainly aware, I have warned our clients over and over to disregard the inflammatory and inaccurate stories and promotions from these sources. I would remind all of you that we have a long-term and disciplined investment strategy in place. There is no reason to obsess and worry one quarter to the next about the markets and the economy.
It can be hard to ignore these fear-mongers because the media, and other dubious sources, can be loud and incessant with their “worry about this” marketing. I advise each of you to limit your media and social media intake and activity. Get back to basics. Do crossword puzzles or build actual jigsaw puzzles, how long has it been since you have done either of these things?
Commit to a new exercise activity, go for a walk, spend more time with family, review your perfect calendars and make sure you are spending your time on the things that are the most important to you.
The markets and the economy will continue to cycle as always, and our strategy is in place. Make sure you are focusing on what matters most in this new year!
Enjoy your lives, enjoy the good things in life in 2019.
As always, it is a pleasure to advise you!