Financial Advisor News

Piedmont, CA

Financial Advisor News

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Piedmont, CA

by: ALISON VAN DYKE

FIRST AND MAIN FINANCIAL

(510) 601-1935

Oakland, CA | Top Rated Financial Planner East Bay 4th Quarter Market Summary

Q4 2019 Market Summary—

7.97% – U.S. momentum stocks                                           1.70% – Global high yield bonds

11.05% – Emerging markets stocks                                        0.32% – Core bonds

10.72% – International profitability stocks                             0.34% – Core municipal bonds

11.70% – U.S. large stocks

12.00% – U.S. small value stocks

11.17% – U.S. Hi Relative Profitability

2019 Totals:

27.25% – U.S. momentum stocks                                         25.14% – Global high yield bonds

14.89% – Emerging markets stocks                                       7.99% – Core bonds

24.49% – International profitability stocks                            8.10% – Core municipal bonds

31.42% – U.S. large stocks

21.47% – U.S. small value stocks

33.11% – U.S. Hi Relative Profitability

Large U.S. stocks fell 4.43% in 2018 with a 14% drop from September 20th to the end of that year.

There was no obvious reason for the sharp drop at the end of 2018 and we ended the year at a relative low from which to bounce and get highly unusual return figures for 2019. Large stocks returned 31.42% last year, nearly three times the long run average (10.7%). But if you measure from before the drop at the end of 2018 until 12/31/19 the gain was 10.4%.

Adjustments aside we did wind up having a very nice 2019 which has pretty well carried on into 2020.

Not too many months ago fears of recession were rampant with speculation not as to if, but when. Odds were being placed by the “experts” and at one point I saw a media station with the headline “Countdown to Recession.”

Fear sells but if we bought into the madness and sold when fear was on high our wealth would have been permanently impaired.

We can’t predict the future but we do know that if we stay invested, we are highly likely to experience returns very close to the long run average if our holding period is sufficiently long.

The longer we hold and experience positive returns the more our wealth compounds to new highs.

Some definable baskets of stocks have been shown over time to return more than large U.S. stocks, but over the last decade this has not been the case. We carry meaningful weights of these baskets in all of our clients’ accounts which was a drag last year and has been for some time. However, like not knowing if a recession is imminent, we have no way to determine when the baskets of stocks that have gotten behind will again have their day in the sun.

We do know some of the things that increased the chances of recession have subsided to some degree.

Trade relations with China have improved and Brexit looks to be well on course for 2020. With economic growth and progress comes increased global wealth (and less poverty). One can only hope that Brexit will push the other large economies in Europe to enact meaningful structural reforms allowing them to experience stronger growth.

I think it’s also worth noting our Federal Reserve Bank very quickly lowered rates to stave off recession which seemed to help in creating a more stable environment from which we could keep moving forward and not dip into a more fearful state.

We remain in one of the best labor environments, ever, in the history of our country.

We may yet have a recession. There are always risks and unknowns but at the moment things look quite good and thus the march to new highs for U.S. stocks. Sometimes people say to me they are certain markets have to fall because we’re hitting new highs, but the opposite is generally the case. New highs often beget new highs and markets move higher not because things are bad, but that expectations are for a better future.

As always, we appreciate the trust you put in us to manage your investments. We are always available for a conversation should questions arise.

Sincerely,

Erik S. Wolfers, MBA, CFP®

 

 

 

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“Best Financial Advisor in Piedmont, CA”

Top Rated Local Financial Advisor / Planner

East Bay Area: Piedmont, Oakland, Berkeley, Alameda, Orinda, CA

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“Best Financial Advisor in Piedmont, CA”

Top Rated Local Financial Advisor / Planner

East Bay Area: Piedmont, Oakland, Berkeley, Alameda, Orinda, CA

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BIO: At First & Main Financial, Alison Van Dyke helps clients with their financial lives. She has worked in Corporate Finance for Bank of America and Chase Manhattan Bank. Alison is pursuing the CFP® certification; she received her MBA at Georgetown and her B.A. in Political Science from UCLA.

235 Wildwood Avenue,
Piedmont, CA 94610, USA

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BIO: At First & Main Financial, Alison Van Dyke helps clients with their financial lives. She has worked in Corporate Finance for Bank of America and Chase Manhattan Bank. Alison is pursuing the CFP® certification; she received her MBA at Georgetown and her B.A. in Political Science from UCLA.