What A Difference A Year Makes

Investing is always a challenge. But investors have endured two radically different investment environments the last two financial years.

These almost-comical headlines from CNBC – by the same author, no less – perfectly capture the 2018 and 2019 investment financial years.

Here’s what’s interesting.

In 2018, all the talk was about how strong the economy and job markets were in the wake of the Tax Cuts & Jobs Act. Things were booming and the Federal Reserve was responding to the growth by hiking interest rates throughout 2018.

This year, it’s been the complete opposite.

Economic growth has slowed. As has jobs growth. And investors have had to endure a seemingly endless stream of negative headlines about trade wars, impeachment, and recession fears.

But in 2018, markets generated poor returns while in 2019 returns have been spectacular. How does that work?!?

It’s one of the clearest examples of the old Wall Street adage, “Good news is bad news, and bad news is good news” we’ve seen in a long time.

Markets are all about expectations of what’s going to happen from here. They’re future-focused. So the fact that things look good/bad on a particular day doesn’t really matter from the market’s standpoint.

It also highlights why so many investors have a hard time trying to time markets. When the news is bad and outlook seems bleak, the market goes up…and conversely when everything seems like it’s going great, the market endures a correction.

Investors who stuck to their plan and stayed the course, rebalancing their portfolios as markets pushed their asset allocations away from targets, have been rewarded. And that’s one of the most important services Financial Design Studio offers to clients.

Coaching investors through the ups-and-downs of the markets.

Making sure they’re sticking to their plan. All while constantly monitoring their portfolios and rebalancing them as necessary.

Might it be time to work with someone who will keep you focused on your important life goals and take the work off your busy plate in trying to make it all happen? That’s exactly what we do at Financial Design Studio, so please reach out if you want to find out how we can serve your family.

Wondering how this affects your future finances? Schedule a call with Financial Design Studio, financial advisors in Deer Park, to discuss your portfolio today.