Investors Have a lot to be Thankful for in 2019
Sources: Sources for data in tables: Equity Market and Fixed Income returns are from JP Morgan as of 11/22/19. Rates and Economic Calendar Data from Bloomberg as of 11/22/19. International developed markets measured by the MSCI EAFE Index, emerging markets measured by the MSCI EM Index. Sector performance is measured using GICS methodology.
Stocks slipped off of previous highs last week. In the U.S., the S&P 500 Index fell to a level of 3110, representing a loss of 0.29%, while the Russell Midcap Index gave back 0.21% for the week. The Russell 2000 Index, a measure of the Nation’s smallest publicly traded firms, returned -0.45%. It was a similar story for international equities as developed and emerging markets returned -0.57% and -0.01% respectively. In fixed income, 10 year U.S. Treasury prices rose on the negative sentiment and the yield decreased to 1.77%.
This week, families across the nation will gather together to celebrate Thanksgiving. Investors, particularly those with significant equity exposure, have plenty to be thankful for thus far in 2019.
Index Returns Year-To-Date
Out of the gate, 2019 proved to be a welcomed relief after a startling finish to 2018, which had investors worried that the longest bull run in history had finally come to an end. More recently, positive news related to trade/tariff issues between the U.S. and China, third quarter earnings in which 75% of S&P 500 companies exceeded earnings-per-share estimates, and a healthy consumer moved markets higher in the latter innings of the current business cycle. It may not have been a smooth ascent, however, those who remained invested during times of heightened volatility have largely been rewarded. We believe that strong fundamentals may lead to further gains, though likely limited, and that our often cited “slowing, but growing” theme will continue into 2020.
With that said, it’s never too early to revisit portfolio allocations to ensure you’re properly positioned heading into the new year. As always, we encourage investors to work with experienced financial professionals to help manage their portfolios through various market cycles within a well-diversified framework that is consistent with their objectives, time-frame and tolerance for risk.
Investing in foreign securities presents certain risks not associated with domestic investments, such as currency fluctuation, political and economic instability, and different accounting standards. This may result in greater share price volatility. These risks are heightened in emerging markets.
There are special risks associated with an investment in real estate, including credit risk, interest rate fluctuations and the impact of varied economic conditions. Distributions from REIT investments are taxed at the owner’s tax bracket.
The prices of small company and mid cap stocks are generally more volatile than large company stocks. They often involve higher risks because smaller companies may lack the management expertise, financial resources, product diversification and competitive strengths to endure adverse economic conditions.
Investing in commodities is not suitable for all investors. Exposure to the commodities markets may subject an investment to greater share price volatility than an investment in traditional equity or debt securities. Investments in commodities may be affected by changes in overall market movements, commodity index volatility, changes in interest rates or factors affecting a particular industry or commodity.
Products that invest in commodities may employ more complex strategies which may expose investors to additional risks.
Investing in fixed income securities involves certain risks such as market risk if sold prior to maturity and credit risk especially if investing in high yield bonds, which have lower ratings and are subject to greater volatility. All fixed income investments may be worth less than original cost upon redemption or maturity. Bond Prices fluctuate inversely to changes in interest rates. Therefore, a general rise in interest rates can result in the decline of the value of your investment.
MSCI- EAFE: The Morgan Stanley Capital International Europe, Australasia and Far East Index, a free float-adjusted market capitalization index that is designed to measure developed-market equity performance, excluding the United States and Canada.
MSCI-Emerging Markets: The Morgan Stanley Capital International Emerging Market Index, is a free float-adjusted market capitalization index that is designed to measure the performance of global emerging markets of about 25 emerging economies.
Russell 3000: The Russell 3000 measures the performance of the 3000 largest US companies based on total market capitalization and represents about 98% of the investible US Equity market.
ML BOFA US Corp Mstr [Merill Lynch US Corporate Master]: The Merrill Lynch Corporate Master Market Index is a statistical composite tracking the performance of the entire US corporate bond market over time.
ML Muni Master [Merill Lynch US Corporate Master]: The Merrill Lynch Municipal Bond Master Index is a broad measure of the municipal fixed income market.
Investors cannot directly purchase any index.
LIBOR, London Interbank Offered Rate, is the rate of interest at which banks offer to lend money to one another in the wholesale money markets in London.
The Dow Jones Industrial Average is an unweighted index of 30 “blue-chip” industrial U.S. stocks.
The S&P Midcap 400 Index is a capitalization-weighted index measuring the performance of the mid-range sector of the U.S. stock market, and represents approximately 7% of the total market value of U.S. equities. Companies in the Index fall between S&P 500 Index and the S&P SmallCap 600 Index in size: between $1-4 billion.
DJ Equity REIT Index represents all publicly traded real estate investment trusts in the Dow Jones U.S. stock universe classified as Equity REITs according to the S&P Dow Jones Indices REIT Industry Classification Hierarchy. These companies are REITs that primarily own and operate income-producing real estate.