Dear Friends,
The headlines couldn’t have been more depressing as we approached the end of 2018. Do you remember seeing this one on CNBC?
The Stock Market is on Pace for the Worst December Since the Great Depression
CNBC, December 17, 2018
It was a strange month – especially since we began 2018 enthusiastically as the 2017 Tax Cuts and Jobs Act spilled over into the New Year. Strong economic news encouraged investors, who put aside fears that rising inflation may lead to higher interest rates.
What Wall Street did not see coming were the spring and summer trade disputes with China, Canada, Mexico, and the European Union.
Fear of a global economic slowdown contributed to a sharp decline in stock prices in October. U.S. economic growth forecasts were tempered in November for 2019, with bulls and bears engaged in a fierce tug-of-war as the year came to a close.
Your December Investment statements were disappointing and was a clear reminder that the stock market actually goes down from time to time.
But then January came and brought euphoria back into the markets. Here’s how CNBC described the stock market just a few weeks later.
The Best January in 30 Years Could Mean Good Things for the Stock Market in 2019
CNBC, January 31, 2019
And they’re right! The S&P 500 was up almost 8 percent, marking the best January performance since 1987.
But what does all this mean in terms of your long-term investment goals?
Very little.
As a client of my firm, much of our discussions revolve around me learning about your financial goals so that I can tailor your investment portfolios to match them. Most of my clients have a long-term investment objective which means that we are less interested in the day-to-day movements of the stock market. Rather, we are more interested in long-term secular trends based on the fundamentals.
That’s why the discouraging headlines in December didn’t bother me much, just as the euphoric headlines in January didn’t really cause me to celebrate.
It’s part of the investment process.
My job as your advisor is to monitor the financial markets and the economic indicators that move them. I am very fortunate to have a research team that I partner with that helps me analyze the important economic cycles that influence our investment decisions.
People like John Lynch and Burt White. John worked as an analyst for Wachovia and Evergreen Investments and now heads up the LPL Financial research team, and Burt White is LPL’s Chief Investment Officer.
I rely on people like John and Burt and other economists that I’ve trusted over the years to help me sort through the hype and focus on the things that help move you closer to your financial goals.
In closing, I want you to know that I will continue to keep an eye on the economy and the financial markets. And while we can be cautiously optimistic about the stock market in 2019, we must also expect periods of economic weakness and be prepared for a recession at some point in the future.
But when that time comes, you can rest assured that I will be reaching out to you and providing the best advice I can given the circumstances.
If you ever have questions or would like to speak about your account in greater detail, I am only a phone call away.
Thanks again for your allowing me to work with you. I arrive at the office every morning humbled by the confidence and trust you have of me and my staff. It’s what drives us.
Sincerely,
Richard Sturm
Managing Partner / Account Executive