We are about a month away from celebrating Thanksgiving, that special time of year when we get together with family and friends for good times and good eats. It is also a great time to take a step back and give thanks to people who have impacted our lives in a positive way, including those no longer with us. It is a joyous time indeed!
It has also been a joyous time for investors! As we look back on 2019, investors can be thankful for the following:
Federal Reserve. Yes, I would most certainly roast a turkey on behalf of Chairman Jerome Powell & Company for finally understanding what the market wants to hear from them. Powell improved his communication effort early this year and helped investors figure out the Fed’s game plan, or as much as we can, regarding its monetary policy. Their more dovish tone has been welcomed by investors all year even though they believe our economy may be in trouble. Investors are looking past the possibility of an economic slowdown because they believe it can be averted through lower rates and a strong consumer. Let’s hope our economy can extend its longest stretch of growth heading into next year!
Global Diversification. I would also roast a turkey for foreign stocks, including those in the emerging markets. They have had a nice turnaround from last year’s negative performance. Yes, there are still ongoing issues with the China trade issues, as well as Brexit (a.k.a., Britain leaving the European Union). These two issues have been messy and have taken longer to resolve than most investors originally thought. As our Investment Committee has noted for the past three to four years, foreign stocks have been the stepchild to U.S. stocks for more than ten years running. We continue to believe that foreign stocks deserve a place in long-term investment portfolios despite the headwinds. This is when investors should pay less attention to the talking heads and doom & gloomers, and more attention to historical investment cycles and investment fundamentals.
September & October. These two months tend to be the worst months of the year for stock markets. This year has proven the opposite; even though October is not technically over as I write this commentary (I hope I didn’t just jinx us!). Just because we experienced weak Septembers and Octobers in the past does not mean it happens every year. If you cashed out of the market because of these fears, then you missed positive returns. Lesson learned: it pays to stay fully invested in your respective investment strategy regardless of popular opinion.
U.S. Companies. Let’s applaud those companies that rewarded its employees by increasing wages, bonuses and instituting new or increased 401(k) matches as a result of reduced corporate income tax rates and/or increased profits. We know not all companies have done this, but many have taken action to make life a little easier for its employees and customers.
As an example, up until recently, DTE, a local business employing thousands, had been rewarding its customers by lowering gas & electric prices due to the corporate income tax cut.
Investors. Let’s pat ourselves on the back for saving and investing for our futures given the challenges life throws at us. If you are someone who puts together a serious game plan to achieve your goals and objectives, then you are on the right path to success! In this 365/24/7 day and age of information at our fingertips, it is easy to get thrown off our path by a mere tweet! Don’t succumb to it!
Ignoring the talking heads as well as the doom & gloomers will help you stick to your long-term game plan!
Stay the course and seek professional help if you are having trouble!