Our market commentary begins with a review of how we entered 2019 with news headlines claiming that the year would be a horrible recession with TV pundits predicting doom and gloom. It only seems fitting that the market would then gain 31% on the year. Specifically, the S&P 500 was up 31%, other asset classes such as foreign, small cap US and real estate were up over 20% on the year. 2019 was a good case for why you should never try to time market ups and downs, and just focus on the long-term results.
BlackRock analysts are optimistic about stocks in 2020. This is due to the de-escalation of the US China trade war, allowing companies to deploy capital that they were otherwise holding on to. During this quarter’s rebalance, we will maintain overweight in US stocks vs foreign developed holdings while adding to our emerging market stock. The Federal Reserve mishandled interest rates in 2018 and had to make up for it in 2019. In 2020, the Feds have indicated a more neutral approach, thus we are adjusting bond holdings to add more short-term corporate high yield bonds and reducing our US Treasury holdings.
In August of 2019, after an in-depth review, we elected to follow BlackRock research in the building of our portfolios. This added research has proven to help build more efficient portfolios. In the fourth quarter of 2019, TD Ameritrade announced all stock trades would be commission free. This greatly opens our investment possibilities and will improve our portfolio even more with no trading costs and access to low cost index funds. During this quarter’s rebalance, we will be substituting some funds for those that will drive down the costs of the portfolios, perform better compared to its benchmark and have the liquidity that we need to conduct more efficient trading.
Each quarter we generate a detailed performance report looking back one year through our Morningstar portfolio accounting software. You can access this report by logging in here.
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Published January 17, 2020