After nearly 10 years of witnessing the U.S. economy and stock market recover—and thrive—some investors are starting to wonder if we’ve seen all that this expansion and bull market have to offer. We believe there’s more room to run, thanks to strong corporate profits and continued fiscal stimulus in the form of government spending, reduced regulation, and lower taxes.
Against this backdrop, the market research department at LPL expects the U.S. economy to grow, supported by increased spending by consumers, businesses, and the federal government. Accordingly, LPL Research forecasts total return possibilities within the range of 8–10% for the S&P 500 Index. With market interest rates climbing from historic lows, bond investors must be prepared for gradually rising rates, with periodic surges that may temporarily affect sentiment. As a result, flat returns for bonds can be expected in 2019, as measured by the Bloomberg Barclays U.S. Aggregate Bond Index.
While we do view the market in 2019 with optimism, we also see the importance of being cautious and disciplined. Many positive fundamentals could be pressured by threatening issues such as trade, deficit spending, monetary policy, or global politics. As a result, we do expect to see more volatility, and continue to encourage clients to embrace that volatility. By managing our emotions and staying in tune with market signals, we can help position ourselves for any market environment.
Below is a link for the 2019 Market Outlook prepared by LPL Research. We want to make sure you’re prepared for and help you through what may be around the corner or further down the line. The LPL Research Outlook 2019 will provide insightful commentary, economic and market guidance, and their investment recommendations to help you navigate the year ahead. As always, if you have any questions, we encourage you to contact us.
Click Here To Download the Market Outlook 2019
Over the last few weeks our team has heard from many of our clients worried about this latest round of volatility in the markets. As volatility appears in the stock and/or bond markets, many of our clients find this an opportune time to reflect on their own and possibly changing tolerance for risk. For others, you simply see the pullback as a buying opportunity and are looking to take advantage of potentially oversold stocks. No matter what your reaction, we want to let you know our thoughts and provide you with relevant and insightful information until this volatility subsides.
If you are looking to reduce risk or pick up some potential deals, we hope you find this information useful for an entry or exit point. We suggest the following steps if you are looking at making any changes:
- Do you currently have a Financial Plan and/or a true Investment Plan, i.e. something written out?
- Do you currently understand the risks with your current Investments, Investment Plan, or the Proposed Plan? We have tools to help illustrate and help you understand likely up and down scenarios.
- Once you can answer yes to the above, whether it is to become more aggressive or conservative we can pick a point to implement your PLAN. Such as, if the S&P is at 2450…your change point may be when the market reaches 2550. (For reference, the S&P 500 opened 2018 at 2695.81 and closed at 2506.85, before dividends down roughly +/-7% for 2018.)
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
