Market Highlights Q4 2018
On September 20, 2018, the S&P closed at an all-time high. Then came the new era of volatility. Despite the economy expanding at a rate not seen in many years, mostly favorable corporate earnings reports, strong consumer spending, tepid inflation, and plenty of jobs, investors ended the year feeling anxious and often afraid. As a result, the S&P declined more than 14% in Q4, wiping out earlier gains and closing down 6.24% for the year.
The news media is awash with speculation as to the causes, and with every overwrought pundit and fantastical headline, the market seems to overreact. Yet despite a disappointing Q4, the aging bull did deliver positive highlights. The economy expanded at an annual rate exceeding 3.0%. Unemployment reached the lowest point since 1969. Consumer income rose and purchases increased.
Still, it’s easy to become nervous in such a volatile investment environment. My goal is to be the calming voice of reason and provide much-needed perspective to help you rise above the headlines. Here is some food for thought:
There are not more sellers than buyers in the market. For everyone selling shares, there is someone buying. This interplay between buyers and sellers is how market participants drive price equilibrium.
Our free market economy will always experience periods of both growth and recession. Economists agree that we are in the late stage of a growth cycle. At this stage, the economy is still growing, but at a slower rate.
- Wise investors don’t get distracted by the short game but focus on long-term growth. No one can reliably predict the timing or severity of a recession, but we’ve been here before. Since 1980, despite annual pullbacks, stocks have returned a compound annual rate of return of 11%.
Perhaps what is most important is that your portfolio is invested in high quality, diversified investments to protect you from excessive downside risk. And if you’re not mentally prepared for the ‘weather of the day,’ rest assured that we are here to help you benefit from the ‘climate of the era.’ When you need a team to get you through the storms, we are always here to help!