First Half of 2019
It was quite an end to 2018 as the market dropped just under 20% from the September high to the December low on December 24. From there the market rallied, including the first 1,000+ point gain for the Dow Jones Industrial Average on December 26. Where do we go from here?
Regarding the stock market, we think that the extreme pessimism and equity sell-off has now offered a solid long term entry point. We do not believe this leads to substantial losses from here or a recession during the year. As previously stated in Ken’s Korner reports, unemployment is low, inflation and interest rates are low, and many companies continue with solid growth prospects.
There are also numerous potential problems with trade, a weakening Europe (including Brexit), rising interest rates (although rates fell substantially on the 10 year treasury to 2.7% from 3.25% during the stock sell-off). What the Fed does in 2019 is another unknown. Ultimately, if we are correct that there is no recession, we feel the set-up is good for this year as sentiment is quite negative, valuations are lower and the economy is still on solid ground overall.
The past couple of months have certainly been challenging for the stocks and both stocks and bonds had a tough year. We still believe we are in a secular bull market that has numerous years left. We have enjoyed our client discussions, regarding retirement planning, long term care realities, demographics and how they may affect investments. We see more opportunities today than we’ve seen in several years.
We greatly appreciate and value our client relationships and look forward to the future with continued optimism.
Best regards,
Ken
Views expressed are those of the author’s and are not necessarily those of Raymond James & Associates and are subject to change without notice. Information contained herein was received from sources believed to be reliable, but accuracy is not guaranteed. Information provided is general in nature, and is not a complete statement of all information necessary for making an investment decision, and is not a recommendation or a solicitation to buy or sell any security. Past performance is not indicative of future results. There is no assurance these trends will continue or that forecasts mentioned will occur. Investing always involves risk and you may incur a profit or loss. No investment strategy can guarantee success.
The Dow Jones Industrial Average is an unmanaged index of 30 widely held securities. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance.
