As we wrap up 2019, our Investment Committee had a long due diligence strategy session planning for potential 2020 strategy adjustments, in what will likely be an “interesting” year (did you know there was an election next year?? Ha-ha).
That being said, I wanted to share a few thoughts and notes, just so you can see where our mind is going into 2020:
- Big picture, our research is showing that the “party continues” and markets slightly rally even higher and “climb the wall of worry”- meaning, earnings are still good, unemployment low and solid fundamentals. What could derail this? A bad or no trade deal, which is a risk, or something totally unknown to any of us (always a risk).
We believe the changes we have been making since early 2019 were the right ones and we stay the course- we lowered volatility in stocks by moving to more value and dividend holdings and increased the quality of the bonds we own across the board.
Our changes in early 2020 will likely be “polishing” tweaks- changing a manager or two, moving a couple percent between sectors.
- As of 10/31/2019, 12 month rolling bond fund flows have outpaced stock fund flows by $416B. Average 1yr return for U.S stocks when bond fund flows outpace by $250B or more is 19.6%. *
- This is the lowest 20-year stock return since the 1950’s. As of November, the rolling 20-year return is 6.2%. When the 20-year rolling return is less than 8% the next 20-year average return historically is 14.8% and the minimum has been 11.7%. **
That’s all for now, just wanted to be proactive and share with you some thoughts as the year winds down. More to come after our early January Investment Committee meeting…. Until then, turn the TV off and spend time with loved ones! Happy holidays!
*Source: Morningstar as of 10/31/19. U.S. stocks represented by the S&P 500 Index, U.S. bonds by the BbgBarc US Agg Bond Index. For stock flows, U.S. stock funds are represented by a combination of the Morningstar category groups U.S. Equity Funds, and Sector Funds. For bond flows, U.S. bond funds are represented by the Morningstar Taxable and Tax Free Fund categories. Past performance does not guarantee or indicate future results. Index performance is for illustrative purposes only. You cannot invest directly in the index.
**Morningstar as of 11/30/19. Stock market represented by S&P 500 from 1/1/70 to 11/2019 and the IA SBBI US Large Cap Index from 1/1/26 to 1/1/70, Past performance does not guarantee or indicate future results.Index performance is for illustrative purposes only. You cannot invest directly in the index.
Any opinions are those of the David Adams Wealth Group and not necessarily those of Raymond James. This material is being provided for informational purposes only and is not a complete description, nor is it a recommendation. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Investing involves risk and you may incur a profit or a loss regardless of strategy selected. Prior to making an investment decision, please consult with your financial advisor about your individual situation.