Economic and Market Outlook

  • The topic of elder abuse and cybersecurity are on the minds of many of us. So we opened with a discussion of these topics.
  • Both the stock and bond markets were strong in 2019. We reviewed the elements contributing to those results.
  • Given an observable deterioration in some metrics, we forecast a positive, albeit more modest, year in 2020.

With aging can sometimes come new challenges. These go beyond health matters to include the possibility of financial fraud being inflicted on seniors. We sought to inform our clients about red flags to be aware of and to monitor. Similarly, cybersecurity is an ever-growing threat to people of all ages and we discussed this as well.

By the end of 2019, both stock and bond markets exhibited excellent results. Of course, this followed the modestly negative returns of 2018. We reviewed the many tailwinds of 2019 that led to this satisfying performance.

Our outlook for 2020 was the next topic. Owing to rising valuations, trade tariffs and other factors, our base case was for a balanced account (roughly 50% stock and 50% bonds) to return between 0-5%. We also articulated the upside and downside case and offered insight into what would bring about a variance from our base case. Two of the themes we explored were innovation and digital payments.

One way to look at stocks is to categorize them as growth or value stocks. The Growth Stocks tend to have higher earnings/share advances, often pay low or no dividends and often have higher price/earnings (P/E) multiples. For Value Stocks, the reverse is true. In 2020, we articulated the view that growth stocks should outperform and that stocks were likely to do better than bonds.