In the Rearview Mirror: Q1 2019

Another quarter has come and gone; a tick of the second hand in your lifelong financial journey.

At this moment, we can compare and contrast the current quarter-end to recent rounds. As a Wall Street Journal article summarized, “Stock investors have been on a wild ride the past six or so months: The S&P 500 has gone from a record high, to being on the cusp of a bear market, to being back within striking distance of its recent peak.”

At this moment, financial headlines are closely watching what’s in store for Brexit, the shape of the U.S. Treasury yield curve, China trade talks, and other potential slowdowns and stimuli.

At this moment, a financial commentator proposed a new “golden cross” is supposedly signaling a bull market ahead, based on comparing the 50-day moving average to the 200-day moving average. Noting the historical data isn’t sufficient to be telling, the author admits (emphasis ours): “The crosses derive their power not because there is something inherent but because many investors believe in them and act on them. Moreover, the media like the stories of golden crosses and death crosses, and promote them. This generates bullish or bearish sentiment.”

Umm, anyway… Then there’s our perspective.

Q1 2019 Market Review Download

As always, this sort of circular logic leads too many investors astray. As you reflect on any forecasting “powers” reported in the popular press, remember the vast majority of them are premised on what may be the flimsiest platform ever devised: human sentiment.

As always, remember how easy it is to get tangled up in the ticks and tocks. There are always causes for global socioeconomic concern. There are almost always cases for optimism as well. Either way, remember these words from financial luminary William Bernstein, M.D., Ph.D., in his March 1 commentary: “Investing, after all, is an operation that transfers wealth to those who have a process and can execute it from those who do not and cannot; from what I’ve seen, the average investor’s strategy consists of pride when prices rise and panic when they fall.”

As always, we encourage you to rise above the news of the day. It is our special privilege to help you do just that. There will always be plenty of prognosticators, enticing you to grab at “golden” opportunities. Fortunately, there are many voices of reason among us as well.

I hope you’ll download our Quarterly Market Review for Q1 and check out the article, Déjà Vu All Over Again. The article discusses some of the many investment fads that have made headlines over the years. You may remember some of them: Black Swan funds, the emergence of the BRIC (Brazil, Russia, India and China) countries, the “new” economy, and FAANG stocks – the list seems endless! Nobel laureate Eugene Fama, who serves on the board of directors of the general partner of Dimensional Fund Advisors, characterized the “shiny object” mentality of many investors when he said, “There’s one robust new idea in finance that has investment implications maybe every 10 or 15 years, but there’s a marketing idea every week.” Good words to remember as you read the stock market news and contemplate the market’s ongoing performance.

In Q2 and beyond, I’m sure we’ll see more “hot” investment opportunities and just as many warnings about what lies ahead. The most important thing for you to remember, though, is that all of these “tips” will come and go. What matters more is taking the long view, and an approach based on research and disciplined investing. That may not sound as exciting as a FAANG stock, but I believe it’s infinitely more reliable.

If you have questions about the impact of the market on the performance of your investments, or would like a second opinion on your investments, I encourage you to contact us. We’d love to help you cut through the clutter and focus on the clearest investment course for you.

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