If we had to pick one word to sum up the 2018 capital markets, that word would be “extremes”. In the span of only a few months, we saw headlines touting both new highs and record lows in the market. This year has been a roller coaster ride for many investors. The capital markets got off to a nice start in January, waned in the Spring, rebounded in late Summer, and ended on a negative note in December.
When the dust settled, almost all areas of the capital markets posted negative performance for 2018. Broad domestic markets were negative across all market capitalizations, with small cap posting double-digit negative returns. International markets fared even worse, with both developed and emerging markets down double digits. Returns for bonds was basically flat for 2018 as we saw the rising interest rate cycle continue throughout the year.
Looking ahead to 2019, we see positives in low unemployment, inflation that remains in-check, and a strong US consumer. However, there are also potential headwinds as well. Will the US economy see more sluggish growth in the coming year? What lies ahead for the Federal Reserve and the path of interest rates? How will tariffs affect global trade?
While no one has a crystal ball to know exactly what lies ahead for global economic growth or the financial markets, what we do know is planning is imperative to keep you on course to meet your financial goals. The new year gives us the opportunity for a fresh start, and it may be a good time to review your financial goals to ensure you are positioned appropriately. Following are a few items you may want to review:
- Have your financial goals changed? Do you have any new goals? Has your time horizon changed?
- Has your risk tolerance changed? Is it still consistent with your short and long-term goals?
- Do you have enough cash to meet spending needs for the next year? When the markets are volatile, and you must sell investments to raise cash, you may be forced to sell at inopportune times. If your cash needs are known, it’s a good idea to plan for them ahead of time.
As we turn the page on a new year, we continue to encourage a long-term perspective, prudent asset allocation, and appropriate diversification in your investment portfolio. If you have any questions about your portfolio or would like to meet and review the information, please call our office for an appointment.
Domani Wealth wishes you the best for 2019.
Domani Wealth, LLC (“Domani”) is an SEC-registered investment adviser with its principal place of business in Lancaster, Pennsylvania. Domani and its representatives may only transact business in states where they are appropriately notice-filed and registered, respectively, or exempt from such requirements.
Post Written by: Angela Gehman Berkosky, CFA