By Matt Rinkey
What a year 2018 was for the markets. After a great January, the markets sold off, but recovered to new highs in September, only to collapse in the fourth quarter led down by momentum stocks such as Amazon, Apple, Facebook, Netflix and Google.
The well-known benchmark indices like the Dow and S&P 500 were down 5.6% and 6.2% respectively, but the carnage was worse for Mid-Cap and Small-Cap stocks, both down over 12%. The European markets were down 16+% and Emerging Markets were down 17%. The banks were down almost 20%, reflecting the flat yield curve, which hurt their lending spreads. At the extreme, Bitcoin plummeted 70%. Even Gold and Bonds fell modestly, offering little shelter from the volatility.
In retrospect, selling into the January strength and moving to cash would have worked well, but of course investment managers cannot and should not attempt to time the markets.
So, what should we expect in 2019? More volatility.
While we believe that the long-term secular Bull market is intact, this Bear trend may not have reached a selling climax. History has shown that riding out these difficult periods works well for those with time on their side. For those who are retired, approaching retirement, or have large upcoming financial obligations, we recommend you review your financial plan and risk tolerance. Please schedule a time to talk with our Certified Financial Planners® about how to optimize your financial future to live your best financial life.