Despite the trade war with China heating up again unexpectedly and the market pulling back slightly last week, it is a good opportunity to stop and reflect that is has been a remarkably strong year in the market. Nearly every sector rose in the double digits and nearly every asset class has been solidly positive for the year—a historically rare feat. Whether the market can hang onto all of these impressive gains or if we see a repeat of last year’s Christmas Eve pull back, a safe bet is that next year’s performance will see a wider dispersion of returns, perhaps the long-awaited shift from growth stocks to value stocks. Strong third quarter earnings have supported the market, while economic data was mixed and geopolitical risks continue to loom as we head into year end.

Nearly Every Sector Up Double Digits

Technology was the clear winner and the only sector that lagged significantly was energy, though still in the positive. Healthcare also under performed substantially, largely as a result of political and regulatory risks surrounding the 2020 election. Fundamentals and Q3 earnings in health care, however, remained strong, so this sector could outperform in 2020 as the prospect of a large scale overhaul of our medical system remains fairly remote.

All Asset Classes Up This Year

Both stocks and bonds, both the U.S. and emerging markets and also gold—everything has gone up in 2019. This is a rare turn of events and unlikely to continue, and so diversification will be key in 2020.

What We’re Reading  

  • Why There’s Never Been a Better Time to be an Individual Investor. Investors have benefited mightily from lower costs, improved investment options, and a more equitable advice model. The next step in this process will be continued improvement in behavioral systems and design. If investors can’t behave when markets go mad, all of the gains that have been made in recent years will be for naught. … (Article)
  • 12 Charts You Ought to See Before the Next Recession. Calling a recession is hard. Timing one is harder. Getting out before it hurts your portfolio and then getting back in when the coast is clear is impossible. So you should focus your energy instead on how to survive one. … (Article)

Market Snapshot

For Week Ending 11/22/2019 (Cumulative Returns) 1

Did You Know?

How much time should you spend on your finances? If you do the math the average American spends more than 85 hours a month watching TV. That’s more than 100 times as people spend on their household finances. … (Article)

Presented by the Investment Committee of Lake Street, an SEC Registered Investment Adviser.

1.  Source – Morningstar, Inc. Global Stocks is represented by MSCI ACWI Index, Developed Markets is represented by MSCI EAFE Index, and Emerging Markets is represented by MSCI EM Index. Corporate Bonds is presented as the Bloomberg-Barclays U.S. Aggregate Bond Market Index. Municipal Bonds is presented as the Bloomberg-Barclays Municipal Bond Market. High Yield Bonds is presented as the Bank of America-Merrill Lynch U.S. High Yield Index. 10 Year Treasury refers to the valuation of a 10 Year Treasury Note, a debt obligation issued by the U.S. Department of the Treasury. Fed Funds Target represents upper limit of the federal funds target range established by the Federal Open Market Committee. Inflation Rate provided for the purposes of this report by the U.S. Bureau of Labor Statistics. Unemployment Rate calculated by the U.S. Bureau of Labor Statistics. WTI Crude Oil refers to the price of a barrel of West Texas Intermediate (NYMEX) Crude Oil. Gold – Spot Price relates to the valuation of an ounce of gold, as traded on the NYSE Arca Exchange. U.S. Dollar refers to the U.S. Dollar Index (DXY). All Returns are denominated in USD (United States Dollar), unless otherwise explicitly noted.

The information contained herein constitutes general information and is not directed to, designed for, or individually tailored to, any particular investor or potential investor. This report is not intended to be a client-specific suitability analysis or recommendation, an offer to participate in any investment, or a recommendation to buy, hold or sell securities. Do not use this report as the sole basis for investment decisions. Do not select an asset class or investment product based on performance alone. Consider all relevant information, including your existing portfolio, investment objectives, risk tolerance, liquidity needs and investment time horizon.