by Ryan Turbyfill, MBA

As I write this a week before Thanksgiving, there is a lot to be thankful for.  I would include the friends and family I can share this time of year with, views of Pikes Peak from my office window and .… how the markets have performed so far in 2019. 

With the market (S&P 500 Index*) being down over 14% in the 4^th quarter of 2018, we felt that some things in the market were oversold or “on sale” so the rally we saw in early 2019 was not really a surprise.  The rest of the 2019 has been a bit of a bumpy path with trade war issues creating volatility, talk of a pending recession and other headlines but ultimately led to one of the better years of market performance in recent memory.

Many times, with the market doing well, other areas falter such as the bond market.  Typically, with a strong economy, the Federal Reserve is inclined to raise interest rates as they did in 2018 or keep them unchanged, which can create a drop-in bond prices.  In 2019, they did the opposite as the Federal Reserve dropped the Fed rate 3 times (I could write another article just on this), which in part, is why the bond market has also enjoyed a strong year.  International markets have under-performed US markets in past few years, but those also snapped back to a great performance thus far in 2019.

When we were forecasting 2019, as I stated above, the first quarter rise wasn’t a big surprise. The overall returns of the market up to now this year have been beyond what most, including us, were expecting.  Corporate earnings continue to remain strong for the most part, unemployment is at record lows and consumer spending is high; though there are some significant headwinds as well.  No concrete progress has been made in the trade war, recession predictions continue to fluctuate between late 2020 and 2021 and savers are facing near all-time low interest rates.

These factors, many pointing in different directions, are the main reason that we construct very diversified portfolios for our clients.  While we don’t try to time the markets, we may be over or underweight certain areas.  No one can consistently predict short term market direction (many pundits try and fail), so we continue to invest for your long-term goals as the future will likely include many corrections such as 4^th quarter last year and also great years like 2019. 

We continue to strive to help achieve your long-term financial goals, with your best interests in our hearts and minds.  Happy Thanksgiving, Happy Holidays and as always, we are only an email or phone call away.

*The S&P 500 Index is an unmanaged stock index of large US Companies. It cannot be directly invested in.

Your Capstone Investment Team

719-477-9883