I’m super excited about 2019. I have to tell you, last year was rough. Volatility, volatility, volatility! But here’s what I’m proud of: PAX Financial Group’s clients somehow created a thick skin in that difficult 2018 fourth quarter and handled it beautifully. But be aware, there’s still volatility coming. So, when you’re on your cell phone at 9:30 at night and you get a text message or an alert that says the Dow is falling 500 points, you can worry, but I hope that it’s not to the degree that it will keep you up at night.
Rest assured, the market is going to be fine. People are still going to buy toilet paper and gasoline and movie tickets and cell phones. They’re going to see the next Star Wars movie.
The market is like a child with a yoyo on an escalator. Don’t worry about that child; instead, focus on that escalator long-term.
In talking with PAX Financial Group’s Chief Investment Officer Bryan Wing, things are looking positive as we continue into the new year.
Here are some highlights of 2019 so far:
The S&P 500 index gained 7.9 percent in January – this marks its best January since 1987. As of Feb. 8, 2019, the S&P 500 was up 8.24 percent. Now keep in mind, everything is relative. It was only a short several weeks ago that the headlines were littered with the negative news of the market’s volatile fourth quarter. So, although the market started 2019 well, we’re still off 6.9 percent from the highs we saw as of Sept. 20, 2018.
What’s been helping the stocks this year?
Primarily, the Fed has given some new life to the market. While last year the market was reacting negatively to the pace that the Fed was raising interest rates, this year, the Fed has softened its language, indicating a willingness to be more patient with raising interest rates. Today, wage growth is accelerating, the unemployment rate remains low and layoffs are at the lowest levels we’ve seen since 1969.
So, what can derail this strong start?
The biggest potential detractors are:
- Concerns about the global economy slowing
- Geopolitical uncertainty
There are continued concerns about the trade tension between the United States and China; the U.K. is dealing with their exit strategy from the European Union; and China’s economy is slowing to its lowest level seen in years. Also, Germany has seen a sharp drop in industrial production.
While the U.S. economy is strong, it faces some headwinds as well, particularly how it will continue to grow GDP while the effects of the tax cuts begin to wane.
What This Means For PAX Financial Clients
Overall, we encourage our clients to remain focused on their long-term goals and invest in a well-balanced portfolio that aligns with those goals.
If you have any concerns, always reach out to your financial advisor. Your advisor should review your situation with you to make sure that your investment decisions now reflect what you’re trying to accomplish in the long-run.
Re-evaluate your net worth, your insurance coverage, your spending habits and capabilities, your budget and your investment performance. Talk with your financial advisor to see if changes need to be made. Don’t act on emotions, but rather, have a professional discussion with your trusted financial advisor.
Remember, staying in touch with your financial advisor is important, and an annual review is crucial to remain on track to reaching your financial goals.
Remember the Investment Recipe
Frankly, middle-class investors have historically been poor financial “cooks,” costing their families hundreds of thousands of dollars over time. At the expense of overusing the “cooking” theme, below is the recipe to increase the odds that your investment “meal” doesn’t burn.
First, for long-term investors, you should add spice. Many people water down their recipe out of fear and take on too little risk. If you are diversified, the odds are in your favor when you add the additional risk to your portfolio.
Second, don’t experiment with ingredients you don’t understand. If you take on too much risk by betting on certain sectors (i.e., energy, technology, etc.), it may take a long time to recover if the sector gets beat up. For example, if you lose 50 percent of your $10,000 investment, it will take 100 percent to break even. This 100 percent rate of return isn’t easy to collect. Maybe you have inside knowledge on a stock or sector. Let’s assume that you place a “bet” and it works. This scenario can be even worse than losing the first time because it begets overconfidence. The stock market has a peculiar way of humbling overconfident investors.
Finally (and maybe most importantly), be patient with the cooking. Most investors don’t stick around for a full market cycle. It takes around five years (fifty-six months) for a market cycle to experience an up and a down. Some people bail when it goes up because they assume others are making more and they don’t want to miss out. Others sell when it goes down because emotions and headlines hijack their brains. Stick to the plan. Successful investors don’t abandon the strategy without experiencing the results over a full market cycle.
The funny thing about investing is that even if you get the ingredients and the recipe right, you still don’t know the temperature of the oven. In other words, unlike setting the oven at 350 degrees and getting some level of predictability, we don’t know with the same certainty how the markets will behave. Embrace the uncertainty. Those who accept the investing unknowns, typically get rewarded over time. Those that avoid them, stare at a pile of uncooked dough (pun intended) and never beat inflation or accumulate wealth.
This is why it’s important to stay in contact with your financial advisor.
Other Exciting News
As 2019 continues to unfold, I’m also excited about what PAX Financial Group is doing.
Not only is PAX expanding in Asheville, NC, but for those who are living near New Braunfels, Cibolo and Schertz, Texas, we will have an office in New Braunfels soon! This is great news for those of you who are allergic to the 1604/35 interchange!
We also continue to offer virtual meetings for our clients who don’t want to drive to our office every time they want to meet with us.
I thank all of our clients once again for your trust in PAX Financial Group. We don’t take this relationship lightly. We know we are your guide on this money journey and we want to make sure you reach the financial goals you’ve set forth.
This material is provided by PAX Financial Group, LLC. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. The information herein has been derived from sources believed to be accurate. Please note: Investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results.