As the first bear market in over 10 years created losses and frightened investors at the end of 2018, equity markets rebounded quickly in the first quarter of 2019. This was a textbook lesson for investors to reflect on the history of the markets and understand the care taken by ACE Wealth Partners to set up strategic portfolios tailored to financial goals and dreams. With the bear market in the rear view mirror and equities recovering, what can we expect moving forward?
As evidenced by recent quarterly earnings, we expect a slowdown, but not a recession in the U.S. economy. Domestics stocks will receive an upward bump if a trade deal is made with China. Likewise, a continued trade war with increased tariffs will hurt stocks and the U.S. economy. A decline in the stock market and a hurt economy would not be good for the current administration. With this in mind, it is our feeling an agreement will come by summer’s end boosting stocks in the short-run. The U.S. stock market is late cycle, but there is still good value after last year’s declines.
Global markets continue to experience greater headwinds than domestic markets. This includes a slowdown in growth in the Chinese economy and the chaos of Brexit. However, the prospects are not entirely grim. China has injected fiscal and monetary stimulus and hopes are trending positive that the U.S.-China trade war will end soon. Regardless of the outcome, the confusing and chaotic Brexit is still in negotiations, but still in negotiations towards a solution. In addition, the International Monetary Fund (IMF) anticipates global growth will increase heading into the second half of the year.
As has been the case in prior years, interest rates are likelier to rise than fall. As a result, we will continue to invest in intermediate-term and short-term bonds while avoiding long-term and junk bonds.
Investors are best served by tuning out the headlines and focusing on long-term goals driven by financial planning and strategic asset management. What you can do is worry about what you can control:
- How much are you saving and investing?
- Is your allocation appropriate and balanced?
- Have you chosen low cost quality investments?
- How are you tracking against your financial plans or goals?
As you navigate through this economy, try to keep a long-term prospective and focus on what you can control. This will lead to a healthier tolerance for the markets while mitigating risks.