4Q 2019 Quarterly Letter

October – December, 2019

Coming into 2019, the stock market was in the midst of a significant correction due to fears of an impending recession.  The Federal Reserve was fueling this concern by signaling additional interest rate hikes, and with no end in sight for the trade war with China, investor patience was being tested.

What a difference a year makes!  2019 will go down as one of the best years ever for the stock market with the averages gaining close to 30%.  The Fed is once again following an easing monetary policy and a trade deal with China should be signed in the coming days.

As we look out to 2020, we remain positive on the stock market.  We do not expect the Fed to make any major adjustments to monetary policy barring a significant change in economic numbers.  And the risk of negative interest rates has abated which should help ease fears of an impending recession.  In addition, an escalation in the China trade war seems to be off the table as we enter the Presidential election year.

Fixed income continues to be challenging.  Short-term rates have seemed to stabilize, and the yield curve has steepened over the past few weeks.  However, interest rates are still at an overall low-level making income generation difficult.  We continue to invest in short and medium-term bonds as we do not feel we are getting appropriately compensated going longer out on the curve.

2020 promises to be an interesting year.  The rhetoric coming out of Washington due to the Presidential election may test our convictions, but while remaining opportunistic, we believe that sticking to a long-term investment strategy is the best way to achieve your financial goals.  We will continue to monitor economic and geopolitical events and adjust portfolios accordingly.

If you have any questions, please give us a call.