virtually all major asset classes were richly rewarded in 1Q2019.
posted their largest one-quarter gain since 3Q2009. As measured by the Wilshire
5000 Total Market Index, US stocks were +14.23% from January 1 – March 31,
stock investors also experienced excellent returns, with the broad-based EAFE
(Europe, Australasia, Far East) Index + 9.04% and EAFE Emerging Markets Index +
9.56% in 1Q2019.
investors in all major sub-asset classes (US Treasuries, US TIPS, US Investment
Grade Corporate, US High Yield, US Municipals, International Developed, and
Emerging Market) experienced strong returns, led by US High Yield (+7.3%) and
Emerging Market (+7.0%).
and Real Estate provided generous returns, with Crude Oil (+32.44%) leading the
way, while gold (+ 1.36%) lagged.
of returns from each asset class highlights the power of diversification and
the difficulty of timing the markets.
We are now
ten years into a US economic expansion since the Great Recession, when the
S&P hit a low point in March, 2009. Since that time, disciplined long-term
investors that believe in the strength and resiliency of publicly-traded
securities have experienced outstanding returns and wealth creation.
If you pay
attention to Headline News and the 24 hour news cycle, you may be distracted by
the ‘issue of the day’ and lose sight of other key factors and larger trends
that tend to drive market performance.
include – US employment remains strong, wages are increasing, corporate profits
are high, bond default rates are low, and the Fed interest rate increase cycle
is on pause.
trends can drive market performance – on a global basis, the world’s population
is getting richer. Hundreds of millions of people in the emerging markets are
entering the middle class, becoming larger consumers and driving demand for
goods and services.
As always, we recommend an investment plan based on your Goals, Risk Tolerance, and Time Horizon that takes advantage of the premiums offered by traded securities.
Richard Gross – Vice President, Wealth Management