Summary | Fourth Quarter 2019
“In many ways, the stock market is like the weather in that if you don’t like the current conditions all you have to do is wait a while.”
This quote attributed to Lou Simpson, the former Chief Investment Officer for Geico, seemed particularly appropriate as we look back not just on the past year, but the past two years. As discussed in our Market Recap & Outlook, the “weather conditions” at the end of 2018 were rather unpleasant. The threat of a protracted trade war with China, the Russia/Mueller investigation, and an ongoing U.S. government shutdown had placed a dark cloud over investors and markets. Despite those concerns (as well as others) continuing to exist into 2019, the turn of the calendar year brought a welcome and profitable change for investors who had been able to “wait a while”.
Despite the shift in conditions from one extreme to the other over the past two years, investors should find it comforting that taken as a whole, stock and bond returns were generally in-line with what our valuation work indicated. On an annualized basis over the last two years, global stocks returned +7.1% and global bonds +2.7%. Both results aligned with our consistent and continuing message to investors that returns, while positive, are likely to fall short of matching historical averages.
As we think about 2020 and beyond, our focus remains on valuations and what they imply in regards to future returns. We’d like nothing better than to expect or see a repeat of the impressive gains investors experienced over the last 12 months, but with valuations remaining stretched (i.e. expensive), the more probable outcome resembles what occurred over the past two years – periodic bouts of inclement weather, but enough sunny, warm weather to ultimately produce positive results.
Call Brad Swinsburg, 404-874-6244 to discuss our outlook for 2020.
Explore more information on the fourth quarter of 2019 by visiting these links:
Unless stated otherwise, any estimates or projections (including performance and risk) given in this presentation are intended to be forward-looking statements. Such estimates are subject to actual known and unknown risks, uncertainties, and other factors that could cause actual results to differ materially from those projected. The securities described within this presentation do not represent all of the securities purchased, sold or recommended for client accounts. The reader should not assume that an investment in such securities was or will be profitable. Past performance does not indicate future results.