The US economy went ROARING into the 20s as we closed the chapter on Q4 as well as the decade. Global markets were solidly higher for the quarter, as well as for 2019. The US consumer remained resilient due to a favorable labor environment, and spending and earnings have held up well. And the longest-running US economic expansion on record now stands at 126 months.

Here’s how some of the major metrics fared:

Index	4th Qr	1 YR
S&P 500 Large Cap Index	8.53%	28.88%
S&P Small Cap 600 Index	7.75%	20.86%
S&P Developed BMI International Index	8.39%	24.50%
S&P U.S. Aggregate Bond Index (total return)	0.11%	7.40%
S&P Municipal Bond Index (total return)	0.65%	7.26%
Dow Jones Equity All REIT Index	-0.78%	24.07%
Dow Jones Commodity Index (spot return)	6.15%	12.12%
Source: Dow Jones, data as/of 12-31-2019 (doesn’t include dividends unless noted)  Click here to view a comprehensive list of index returns.

Looking at the US economy – specifically, the S&P 500 – its 2019 performance was the best since 2013. All sectors had positive returns, led by technology (second year in a row), communication companies, and financials. Growth stocks outperformed value stocks, again. And 90% of the stocks in the index were positive (82% up double digits), while 9% of stocks were negative (4% down double digits). Some of the relatively under-performing areas included oil, natural gas, cannabis, and apparel companies.

European equities had their best year in the past decade, as did the price of gold. Small US companies decided to join the party as well. It’s hard to identify individual countries that did not do well in 2019, but I suppose if you ventured into Bangladesh or Poland for investing, you might be disappointed.

Quite a different scenario from one year ago after experiencing a large December pullback. At that point in time, you would have had a hard time finding anyone who would have predicted gains in 2019, let alone double-digit gains!

Bonds were no exception, as they also had above-average returns in 2019. Ten-year treasuries yielded 1.92%, which is more than 3/4 of a percent lower than where they started the year. You may recall that most “experts” predicted interest rates would increase in 2019 – they were obviously incorrect. Inflation remains low.

Domestic and global real estate prospered, both residential and commercial. Housing data remained strong and we saw both existing home sales, housing permits, and home prices tick generally higher.

The price of oil began the year at $46.54 a barrel, peaked in the mid-60s, and eventually settled at a year-end price of $61.21. That’s a 30%+ gain for the year, the largest move higher for oil in years.

Yet if you believed the financial media throughout the year, you would have thought a recession was about to happen and the market would crash. What actually transpired was tremendous job growth, the lowest unemployment rate in 50 years, and record stock market highs. I guess that’s why I also encourage people to not focus on the negative news!

Speaking of negative news, I always tell investors there are consistently going to be concerns trying to derail our financial futures. Whether it’s the Brexit situation, geopolitical tensions (Hong Kong, Iran, China), or impeachment…there will always be SOMETHING to worry about. Always has been, always will be. The year ahead will undoubtedly be dominated by U.S. political drama and a host of different challenges.

But as we popped the champagne heading into the new year, our solid 2019 portfolio returns should give us plenty to feel good about. I am not counting on a repeat performance in 2020, but it doesn’t mean we cannot have another positive year. In fact, a case can be made that stocks remain cheap at the current level of profits. Maybe more so given the expected earnings growth. Lower tax rates and improved public policy have been accommodating. The current expansion won’t last forever obviously, but it may not even end soon.

Last year at this time, I used my airplane analogy: I am flying the plane and adjusting our flight plan according to the environment. I asked you (my passengers) to buckle your seat belt as we navigated the turbulence. We’re currently cruising at a nice altitude, and you’re free to walk about the cabin. I am cautiously optimistic as we look through the cockpit window. It won’t always be this comfortable, but we’ll be on the lookout for any upcoming warning signs.

Brandon

Disclaimer: This information contains forward-looking statements about various economic trends and strategies. You are cautioned that such forward-looking statements are subject to significant business, economic and competitive uncertainties and actual results could be materially different. There are no guarantees associated with any forecast and the opinions stated here are subject to change at any time and are the opinion of the advisor. Data comes from the following sources: Census Bureau, Bureau of Labor Statistics, Bureau of Economic Analysis, the Federal Reserve Board, and Dow Jones. Data is taken from sources generally believed to be reliable, but no guarantee is given to its accuracy.