January 2020 Market Insights

By: Ryan P. Johnson, CFA, CFP® - Director of Equity Research

In the month of December, the S&P 500 gained 3.0% and reached new highs. This capped off a year of strong stock market returns, with the S&P 500 up 31.5% including dividends. The Nasdaq Composite reached 9,000 for the first time, while the Dow Jones Industrial Average recently passed the 29,000 level. International and small cap stocks gained as well but did not surpass highs set in 2018. Bond yields remained steady at relatively low levels, which has been good for the housing market but not as favorable for savers. Economic indicators related to consumer confidence and services employment have remained positive, while national unemployment of 3.5% remains at multi-decade lows.

The Federal Reserve is expected to keep their very short-term rates unchanged for most of 2020. Historically the Fed has not made moves in the months leading up to a Presidential election, which already seems to be on the minds of investors. We feel it is too early to position portfolios for any political outcome this fall; the more important position is your mix of stocks and bonds. We manage within that allocation for longer time periods, such as 5 years or more. Even if an outcome or event surprises the market, we have often seen a second, third, or even fourth opportunity to make changes in portfolios.

On December 20, 2019, the SECURE Act was signed into law. While many changes were included in the Act, two highlights revealed the elimination of the maximum age for IRA contributions and increased the age for required minimum distributions (RMDs) to 72 for those younger than age 70.5 at the end of 2019. For additional information concerning the SECURE Act, please view the video on our website, www.mybuckingham.com, under the Insights tab. You may also notice a new feature on our site, Market Recap, which gets updated every Friday afternoon. This is a quick read on what might have moved the markets every week.

The markets have been encouraged by the recently completed “phase one” trade deal with China and by the NAFTA-replacement USMCA (U.S.-Mexico-Canada Agreement) that is ready to be signed. Volatility has subsided for the time being, and the new year has started off on a strong note.

Ryan P. Johnson, CFA, CFP®
Director of Equity Research

RISKS AND IMPORTANT CONSIDERATIONS

Views and opinions expressed here are for informational and educational purposes only and may change at any time based on market or other conditions or may not come to pass. This material is not a solicitation to buy or sell securities and should not be considered specific legal, investment, or tax advice. The information provided does not consider the objectives, financial situation, or needs of any specific individual. All investments carry a degree of risk and there is no certainty that an investment will provide positive performance over any stated period. Equity investments are subject to company specific and market risks. Equities may decline in response to adverse company news, industry developments, or economic data. Fixed income securities are subject to market, credit, and interest rate risks. As interest rates rise, bond prices may fall. Past performance is no guarantee of future results.