The turning of the calendar always presents a good time to reflect on the prior year. It gives me a time to slow down and think of where we have been. Given my chosen profession, it’s only logical that one area I like to reflect is what happened in capital markets, which is certainly something our clients care deeply about. Well 2019 didn’t disappoint as it was one heck of a year to end the decade. Let’s take a quick moment to discuss the general investment landscape for the year that was.
Here are my top bullet points to summarize 2019:
- 2019 was one of the few years where nearly every asset class happened to do well. That bodes well for both aggressive, moderate, and conservative investors alike.
- Geopolitical fears dominated headlines throughout the year, but we gained some clarity on both US/China trade tensions and with Brexit. The global markets, represented by the MSCI ACWI (All Country World) Index, were up over 26%. As an aside, the MSCI ACWI is our preferred index for gauging global equity returns as its designed to measure a vast majority of publicly traded markets around the globe.
- The US markets were up over 31% which was a stark difference from how 2018 ended. Heavily attributed to a strong consumer economy and geopolitical clarity, this rounded out one of the best years in global equities in a decade. An interesting note is that this March will officially mark the 11th straight year of bull markets.
- The European markets were up an approx. 22%, while emerging markets were slightly behind at roughly 18%. Again, a lot of this had to do with calming tensions with trade relations and Brexit fall out.
- Strong returns weren’t exclusively for equity markets in 2019 as bond investors were also rewarded. We can attribute this heavily to benchmark interest rates being lowered 3 separate times by the Federal Reserve. During the first half of the year, the concerns over global growth and trade caused the Fed to do a 180-degree turn (not 360 as many people say as this has you end up in the same position) and begin reducing rates after several years of increasing them.
- What this meant for bond markets was a nice positive year where both municipal and taxable bonds (U.S. government, corporate, and mortgage-backed bonds) were up in the 7-8% range. This bodes really well for the conservative investor. Additionally, this comes off the back of a flat year in the bond markets for calendar-year 2018.
I always tell people the same thing (my mom amongst everyone else) when asked what we have in store for this year in capital markets. I’ll let you know in December! With that said, recent economic events lead us to believe any recessionary environment is likely a little time away. This doesn’t mean things can’t change in a hurry. What we do know is if we are properly diversified and review this on a regular basis you should be armed both financially and mentally to handle whatever the future has in store.
If you’d like to hear a more detailed overview of capital markets in 2019 and our outlook for 2020, I encourage you to join us on February 12th at noon when our CIO, Mike Horwath, will host a webinar titled “A Year in Review and the Year Ahead.” Click here to register.
Thanks, as always, for trusting us with your life savings. We continually take it very seriously and invest substantial resources into making sure you get the best of what is out there to offer. Let’s check back in December!
In his role as Financial Planner, Andrew forges lifelong relationships with clients. He coaches them through all stages of life and guides them to better achieve their life goals. Andrew loves helping others by spreading his knowledge on finance, investments, and the pursuit of happiness/fulfillment. He writes nationally recognized, weekly blog posts on these topics and is a regular contributor to Kiplinger. Andrew has been published in The Wall Street Journal, Barron’s, Financial Advisor Magazine, US News & World Report, USA Today, CNBC, along with many other publications.
For more information or to book a consult with Andrew or the other firm partners, Kyle Hill and David Levy, click the link below.
Financial planning and Investment advisory services offered through Diversified, LLC, a registered investment advisor. Securities offered through Securities Service Network, LLC, Member FINRA, SIPC. Some associates of Diversified, LLC are registered representatives of Securities Service Network, LLC, a registered broker/dealer, 9729 Cogdill Road, Knoxville, TN 37932. (800) 264-5499.