By: Vicki Simpson
As I have been reflecting on the past year in the markets, the following words capture the many highs and lows of 2018.
Volatility. Rising interest rates. Earnings. Wages. Valuations. Bull market. Trade wars. Tweets. Correction. Bear market.
I can imagine them stacked up as a memorial to the past year, marking this place in time so we can leave it behind and move forward in 2019.
Let’s first take a look at 2018, by the numbers.
I will not say that 2018 lacked excitement! We stood upon the mountaintop at the end of the third quarter with cautious optimism. Unfortunately, by mid-October, the S&P 500 dropped nearly 5% and continued to tumble down the mountainside for most of the fourth quarter. Q4 hit hard across all markets as shown by the red bars in the chart below. Taking a step back to look at the year as a whole, we see the U.S. markets were down more than 4%, but fared better than all other equity markets and alternatives. The bond markets struggled as well, remaining relatively flat for the year, and did not provide the counterweight to equities that we have experienced in the past.
As we look back three years, the S&P 500 is up nearly 10% in that time frame, still showing evidence of the amazing growth in 2016 and 2017 that well exceeded the recent losses in 2018. The uphill climb surely strengthened our legs and tested our endurance which can only help us weather whatever comes next.
The investment committee continues to track performance and market trends, evaluate changes such as interest rate hikes and assess the resulting impact to client portfolios. Who knows what valleys and obstacles lay ahead in 2019 on our way to the next mountaintop, but we are committed to coming alongside each of our clients on this journey.