TrustWell’s Quarterly Market Review: Q3 2019

By Brett Freese

Market Highlights:

• Stocks had a mixed quarter with US Large Cap holding on to some gains
• US Bonds had a strong quarter in light of decreasing interest rates
• Gold shines again with a strong quarterly return

Economic Notes:

• Financial markets continue to wrestle with both trade and political uncertainty
• Federal Reserve has lowered the Federal Funds rate target range from 2.25 – 2.5% to 1.75 -2.00%. Note: The Federal Reserve has a dual mandate to achieve both stable prices and maximum sustainable employment.
• Europe still struggles to get past worries of regional economic slowing.
• In India, the corporate tax cuts continue to drive Indian stocks upward

Historical Stock Market Declines:

Market declines and inclines rarely look the same or even feel the same, but they do happen and the ups and downs are a part of the process – It is important to have a plan/strategy so emotions don’t dictate buying or selling.

A 5% or greater loss occurs about 3 times a year
A 10% or greater loss occurs about once a year
A 15% or greater loss occurs about once every 2 years
A 20% or greater loss occurs about once every 3.5 years

Please know that when stock prices go down the “market collapse gurus” receive the most air time. Likewise, when stock prices go up all the “bull market gurus” talk about how the market will continue to be up BIG. Please know that most “gurus” are great with hindsight to justify how important it is to have their voice heard.

Market Scorecard for the last 13 weeks ending 9/27/2019:

US Equities:

+1.77%               S&P 500 (Index of the largest US publicly traded companies)

-2.40%                Russell 2000 (Index of 2000 Small-cap US publicly traded companies)

Global Equities:

+1.50%                MSCI EAFE (Index of Large and Mid-cap across 21 developed markets non-US)

-3.16%                MSCI EM (Index of Large and Mid-cap across 24 emerging markets non-US)

US Bonds:

+2.27%                 Barclays US Aggregate Bond Index (Broad Bond Market Index)

+3.34%                 USTREAS T-Bill Constant Maturity Index (US Short-term Bills Index)

+1.58%                 Barclays Municipal Bond Index

Other:

+0.02%                Morningstar World Bond Category Index

+6.85%                LBMA Gold Price

Market Indicators:

Inflation:
1.75% as of 09/12/19  (Down 0.04% from1.79% in June)

Unemployment: 
3.7% as of 09/06/19  (Up 0.01% from 3.6 in June)

Fed Funds Target Rate:
1.75-2.00% as of 09/27/19  (Down from 2.25-2.50% on 6/25/19)

Suggested Next Steps:

• Understand that market cycles are normal. The markets go up and down in mostly unpredictable directions and amounts. The ups and downs of investments many times seem to make sense only after they happen, however, market prediction is very difficult. (i.e. the next stock market crash has been predicted every year since 2008).
• Your investments are just one factor in the success of your life, money, and purpose. Make sure that you are confident in your full financial plan, so you can successfully have an amazing ROL (Return on Life).
• Your investment allocation and diversification are important factors in both risk management and future returns. Therefore, If you have questions about your investment plan, please schedule a phone or in-person meeting with your TrustWell Financial Advisor.