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2019 Year-End Comments

“There are two kinds of forecasters: those who don’t know and those who don’t know they don’t know.” —Economist, John Kenneth Galbraith

The new year always marks the season of forecasts and predictions. We are barraged by experts forecasting the stock market, the economy and interest rates. While entertaining, these predictions, made with great conviction and accompanied by statistics to back them up, can prove detrimental to investment performance. I believe it is better to admit that the future is unknowable.

What better example of this than the scenario that took place one year ago? The year 2018 ended on a sour note for the stock market. The S & P 500 Stock Index finished the year with a 13.5% decline in the fourth quarter. Forecasters and pundits were almost uniformly bearish. Most were forecasting that the Fed would raise interest rates in 2019, the trade war would continue without progress, the U.S. economy would be sluggish, and stock market performance would be lackluster at best. Could the forecast have been more wrong?

During the year 2019, interest rates declined as the Fed lowered interest rates. Some trade resolution was reached, the economy continued growing, and the stock market had one of its best years of the decade.

We will continue to structure investment portfolios for long term returns, while considering each client’s risk tolerance.

Best wishes for a happy, healthy and — I hope — prosperous New Year.


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