January News – What Will 2020 Bring?

December 30, 2019 5 Minute Read

Last year at this time I wrote about being grateful. It is the superpower we all have to increase our happiness and have more of what is important to us. I also wrote that it is a good time to take stock in our accomplishments from the year and be thankful for those outcomes.

Want to get to the next level of gratefulness?  Be grateful for the setbacks as well.  A challenging relationship, a tough work project, unexpected expenses, or other financial challenges are all things you can be grateful for.  Why?  Because that challenge or obstacle may be the very thing that can launch you in a new direction toward an even bigger goal.  Have a challenging health issue?  Maybe this is the opportunity to take better care of yourself in the coming year and find the answer to what makes you healthy, happy, and alive and eliminate the things that don’t.  This is just an example that comes to mind and one that applies to me as I work to have a healthier lifestyle.  So, to break it down, make a list of everything you have accomplished this year and take some time to be grateful for all you have and all you have done.  Then, find an area of struggle, concern, or frustration and make a change, a goal or a project that renders that issue obsolete.  Can you find a project so large that it makes your current concern seem a bit silly?  Now you are on to something.  Start to envision that project complete and work backwards to where you are today.  Let me know how I can support you in the coming year.

Thank you for being our newsletter subscriber.  You are our customers, our professional network, and more generally people that matter.  I appreciate you and I use this space to give you information that you can use and let you know about trends I think are important. If you think of something you’d like me to address I’d love to hear from you. I rarely use this newsletter to report on the market or make predictions.  I figure you can get all the market information you need on any of the financial pages that are on the internet and I rarely make predictions because I think it is foolish. However, I thought it might be nice to recap the year we just had and make some observations about what we might expect in the coming year.

 

Where is this market going?

We have been on an upward trajectory since March of 2009.  A very long time for a bull market.  But that doesn’t mean it won’t continue.  Our economy is relatively strong especially when compared to other economies around the world.  Like baseball, there is no telling how long an inning will go.  It is also likely that the economy will stay strong in an election year as incumbent presidents usually employ any tactics necessary to keep the economy going.  Elections do not go well for presidents when the economy is not strong.  That said, it is unlikely that the market will return next year anything close to this year. If the S&P 500 follows this year’s 29% 1 return with even high single digits returns next year I will be impressed.  Does that mean we abandon US stocks?  Not in my view.  In the coming year we will be looking to trim the highflyers, think Apple, Facebook, Amazon, Google and add companies that have proven track records in challenging markets.  I also think it pays to look outside of the US at Europe, especially the UK and at emerging markets like India and China even when these countries look the scariest.  This isn’t a recommendation just an observation that when markets get expensive as the US markets have it makes sense to look elsewhere to areas that may have been ignored or those where investors have been reluctant to wade out into.

 

What about bonds?

It may be even harder to make money in bonds in the coming year, though the Federal Reserve seems to be on hold with interest rates for the foreseeable future, rates are likely to rise in the coming year. Interest rates are near historic lows and investors are overpaying for anything with yield (the interest or dividend attached to an investment).  Areas to be cautious are high-yield bonds and corporate or government bonds with maturities (the date you get your money back) of more than 10 years.  We continue to like CA municipal bonds for those that live in California and especially those in higher tax brackets. There is no simple answer here, but to summarize, lean toward shorter maturities and higher quality for the foreseeable future.  Venture into CA municipal bonds carefully and try not to pay too much for yield.  Which I recognize is easier said than done.


The information provided is for guidance and informational purposes only.  The articles are not the opinions of ProCore Advisors, LLC

  1. https://www.wsj.com/articles/global-stocks-mixed-on-last-day-of-exceptional-year-11577787736