Quarterly Commentary – January 2020

A few thoughts on the year 2019. First WOW, who would have ever thought that the year would turn out this way and second, thank goodness for Impeachment. More on the financial markets in a moment but first on the political climate.

Why do I say “thank goodness for Impeachment? Am I rooting against President Trump? No, I do not mean to make a statement on that process one way or the other, but I do see the impeachment vote having one clear positive result, and that is that both sides decided to come together and move legislation that had been stalled in the mire for the better part of the year. In the last week of the Congressional session, the following was accomplished.

  • Passage of the United States, Mexico and Canada (USMCA) Trade Agreement
  • Government Spending Bill, Avoiding a government shutdown
  • SECURE Act, a bill making substantial changes in the retirement plan arena
  • Round One of the trade negotiations with China


While it remains to be seen the impact of these measures, the simple fact that agreements could be reached was indeed astonishing.

On top of those accomplishments were the spectacular gains of the major United States and international stock markets.  After the debacle that was the 4th quarter of 2018 (Standard & Poor 500 Index down -13.55%), who would have thought that 2019 would turn out this way? Here are the 2019 returns for some of the most widely watch stock indexes. These are unmanaged indexes that cover a broad range of investment markets.

S&P 500 Index  (essentially the largest 500 U.S. companies) 31.33%
Dow Jones Industrial Average  (30 large U.S. companies) 22.34%
Nasdaq  (broad index of U.S. companies; technology) 35.23%
Total Market Index (3587 stocks) 30.67%
EFA (International index; 919 stocks) 21.95%


Very few, if any, projected such a positive year for stocks in 2019. Yet these results did occur, and they are real. For our part, here are the last two sentences of our January 2019 newsletter.

“I may be dead wrong, but this does not look to be anywhere like the past two market crashes or for that matter the crashes of 72-74 or 29-33.”

“Our advice is to remain allocated and let the markets work through these rocky times, and yes, keep an eye on history. We have been here before; the economic ship gets righted, and rationality once again takes over.” (Cashman Consulting newsletter January 2019)

So, where do we go from here? What does the crystal ball say for the year 2020? I cannot say that a crystal ball is involved here, but we do have some thoughts on this upcoming year. First, as we have said before, what do we know?

Interest rates are still low with the 10 Year U.S. Treasury Note at 1.92% and 30-year mortgage rates under 4%. Both precursors of a strong stock market as low 10 Year U.S. Treasury rates mean less competition for stocks (as opposed to a 5% or better U.S. Treasury rate), and low mortgage rates lead to more housing starts resulting in a strong market for all things construction-related.

Unemployment is still low, and incomes are rising. One can certainly argue whether these gains are “even” across all regions or subsets of the country but I can certainly tell you this. If you own a single share of common stock or a stock mutual fund, you have been a winner in this economic climate. As of September 30, 2019, there were 55 million current or former participants in the country’s collective 401(k) plans holding $5.9 trillion in Plan assets. Additionally, there is $9.8 trillion in Individual Retirement Accounts (IRA) covering an estimated 46 million households. (www.ici.org/401k)

That is indeed a lot of money and proof that all benefits have not gone to just a “select few,” but indeed to each person in this country that made a choice to save for themselves.  Over the last 40 years in the financial services industry, I have learned that it does not take a lot to make a difference. However, what it does take is discipline and commitment to take control of one’s financial picture.

For those that choose that route, they have been richly rewarded.


Past performance does not indicate future results. This material represents an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed by Kestra Advisory Services, LLC. as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. The S&P 500 is comprised of 500 stocks representing major U.S. industrial sectors and is considered representative of the market as a whole. Performance figures are inclusive of dividends reinvested. Investors cannot invest directly in an index. Standard & Poor’s Index data can be found at http://www.standardandpoors.com/home/en/us. The Dow Jones Industrial Average is a popular indicator of the stock market based on the average closing prices of 30 active U.S. stocks representative of the overall economy. The Nasdaq Stock Market is an American stock exchange. It is the second-largest exchange in the world by market capitalization, behind only the New York Stock Exchange located in the same city. The Bloomberg Barclays US Aggregate Bond Index is a market capitalization-weighted index, meaning the securities in the index are weighted according to the market size of each bond type. Most U.S. traded investment grade bonds are represented. Municipal bonds, and Treasury Inflation-Protected Securities are excluded, due to tax treatment issues. The index includes Treasury securities, Government agency bonds, Mortgage-backed bonds, corporate bonds, and a small amount of foreign bonds traded in U.S. The MSCI ACWI ex USA Index captures large and mid-cap representation across 22 of 23 Developed Markets (DM) countries (excluding the US) and 24 Emerging Markets (EM) countries*. With 2,154 constituents, the index covers approximately 85% of the global equity opportunity set outside the US. EEM is an index of stocks in markets that are deemed to be emerging. Total Market Index seeks to track the performance of a benchmark index that measures the investment return of the overall stock market. The fund employs an indexing investment approach designed to track the performance of the CRSP US Total Market Index, which represents approximately 100% of the investable U.S. stock market and includes large-, mid-, small-, and micro-cap stocks regularly traded on the New York Stock Exchange and Nasdaq. It invests by sampling the index, meaning that it holds a broadly diversified collection of securities that, in the aggregate, approximates the full index in terms of key characteristics.