by Scott Ronalds
From our Quarterly Report:
On the cover page of last year’s Fourth Quarter Report, we wrote, “In weak markets, investors should be raising their expectations for stock returns, not lowering them as is so often the case.”
I don’t know if our report raised any expectations, but the 2019 results speak for themselves. Bond and stock markets were strong and at Steadyhand, we finished the year on an up note. Indeed, 2019 was the exact opposite of 2018, which was a down year that ended poorly.
The strength of the bond market was 2019’s biggest surprise. Interest rates were already low when the year started but they fell even lower. Concerns about Trump, trade and recession contributed to the declines. As a reminder, when interest rates drop, existing bonds become more valuable and rise in price. Last year, the bond market’s 6.9% return was made up of roughly 3% interest income and 4% price appreciation.
The stock market also surprised some, although a good portion of the gains were a recovery from what was (in hindsight) an overly negative reaction at the end of last year. Nonetheless, corporate profits continued to grow, and investors searched for alternatives to low-yielding bonds. Market indices were led by a narrow group of stocks in the technology, consumer products, real estate and gold sectors.
Read Tom's full brief and the rest of our Report here.
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