During this time last year, I read a plethora of publications attempting to predict what would happen in 2019. By and large, the majority of these reports indicated they thought 2019 would be a year of “moderate” returns (i.e. 7% return for the total stock market and 2% return for the total bond market).
Stock and bond market returns have far exceeded expectations. Essentially, we got 4 years’ worth of expected returns in 2019 alone.
According to Morningstar (as of 12/16/2019)
- US Total Market +28.63%
- US Core Bond +8.69%
- MSCI World ex US +21.03%
- MSCI EM USD +12.54%
While these publications are well intentioned, ultimately, we have no idea what market will do in the short run (I generally consider short term to be 3 years or less). If we had a crystal ball, it would have been wonderful to put all of our available dollars into the US Stock Market and gotten a 28% return. I think most people would have been very happy about that. However, let us not forget 2008 where from peak to trough the S&P 500 lost over 50%. Very few saw that crash coming.
As we look to the years ahead, I would encourage you to focus on the things you can control: being diversified, spending less than you make, and making sure your investments match your goals. In addition, I encourage you to have faith that the markets work over long periods of time, patience (because we don’t always get the great return when we want it), and discipline to weather the storms and stick to the investment plan.
If you have any questions about your future financial plans, please feel free to reach out.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. Indices mentioned are unmanaged and cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. Past performance is no guarantee of future results. No strategy assures success or protects against loss. Investing involves risk including loss of principal.
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