Our Thoughts on Equities
It was a banner year for the financial markets in 2019, with the S&P 500 returning 31.5%1 and global equities (as measured by the ACWI) up 26%.2 Will equity markets remain strong in the year ahead? Our investment team, guided by Chief Investment Officer John Silvis, continually reviews and analyzes a host of economic factors that inform our thinking.
Here’s what the team says current data suggest is in store for this year:
• The economy will continue to expand. The housing market (generally an indicator of economic growth) is trending upwards, with the Census Bureau showing housing starts at over 1.6 million on an annualized basis in December,3 the best reading since before the financial crisis. In addition, January’s reading of the Bloomberg Consumer Comfort Index was the highest it’s been since the year 2000.4
• Equity markets will build off last year’s gains. An analysis of the S&P 500 index shows a positive return in the years following a total return of 20% or higher 15 out of 18 times since 1950. The three exception years that followed with negative returns were recession years, which we do not anticipate happening in 2020.
• Some volatility should be expected. There are several political situations that may affect market volatility. To begin with, we are in an election year, generally a factor for volatility, and we are in the midst of an ongoing impeachment trial in the Senate. Additionally, Brexit is pending, and increased tensions from trade disputes with China and Europe may impact the financial markets.
At Luma Wealth, we believe in taking a long-term diversified approach and keeping clients informed. We regularly share the thinking of our credentialed financial professionals who conduct market analyses on an ongoing basis. Should you ever have questions about the economy or your portfolio, please reach out to your Luma Wealth team.
1 Stocks close out best year since 2013, December 31, 2019, AP News, https://apnews.com/58fdefbcb8bb58c1ddd494ba2f033397
2 MSCI ACWI Index (USD), December 31, 2019, MSCI, https://www.msci.com/documents/10199/a71b65b5-d0ea-4b5c-a709-24b1213bc3c5
3 Monthly New Residential Construction December 2019, Release Number CB20-09, January 17, 2020, United States Census Bureau, https://www.census.gov/construction/nrc/pdf/newresconst.pdf
4 U.S. Consumer Comfort Reaches Highest Level in 19 Years, January 16, 2020, Bloomberg, https://www.bloomberg.com/news/articles/2020-01-16/u-s-consumer-comfort-index-advances-to-more-than-19-year-high
Luma Wealth is registered with Hightower Securities, LLC, member FINRA and SIPC, and with Hightower Advisors, LLC, a registered investment advisor with the SEC. Securities are offered through Hightower Securities, LLC; advisory services are offered through Hightower Advisors, LLC.
This is not an offer to buy or sell securities. No investment process is free of risk, and there is no guarantee that the investment process or the investment opportunities referenced herein will be profitable. Past performance is not indicative of current or future performance and is not a guarantee. The investment opportunities referenced herein may not be suitable for all investors.
All data and information reference herein are from sources believed to be reliable. Any opinions, news, research, analyses, prices, or other information contained in this research is provided as general market commentary, it does not constitute investment advice. The team and Hightower shall not in any way be liable for claims, and make no expressed or implied representations or warranties as to the accuracy or completeness of the data and other information, or for statements or errors contained in or omissions from the obtained data and information referenced herein. The data and information are provided as of the date referenced. Such data and information are subject to change without notice.
This document was created for informational purposes only; the opinions expressed are solely those of the team and do not represent those of Hightower Advisors, LLC, or any of its affiliates.