Investors in virtually all major asset classes were richly rewarded in 1Q2019.
US stocks 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, 2019.
International 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.
Bond 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%).
Commodities and Real Estate provided generous returns, with Crude Oil (+32.44%) leading the way, while gold (+ 1.36%) lagged.
The sequence 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.
Key factors 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.
Larger 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