As 2019 began, investors feared what the markets would provide as an encore to the historic 4th quarter of 2018, which featured the worst December since the Great Depression. Well, it did not take long for the market to recoup its losses in 2019 and then some, actually, quite a bit more. The S&P 500 soared, gaining 31.49% and bond returns were excellent driven by a healthy economy, the technology sector and an accommodative Federal Reserve, which lowered the benchmark rate on 3 separate occasions during the course of the year. While the cloud of US-China trade talks hung over the markets, it did little to slow the markets.
“I’m not here to talk about the past” (Mark McGwire once stated in front of Congress-- it didn’t go so well)... so, what will 2020 bring? As almost every financial legal disclaimer states, past results do not guarantee future performance. However, election years tend to provide uncertainty, which is typically not a friend of the markets. In the political environment we now live in and the impeachment process commencing, it makes it difficult to make predictions. Unemployment is at record lows, the stock market is coming off a great year, trade tensions with China seem to be easing however, US government debt continues to balloon, stability in the Middle East is a concern and PE ratios expanding provides a challenging mix. The one guarantee we have for you is that you will be sick and tired of political ads by late summer. With the reduction in interest rates, equities are expected to lead as bonds provide reduced appreciation upside. We can’t predict when the Bull Run will end, but proper asset allocation of your portfolio will help buffer the downside when that time comes.
A couple of items we want you to be aware of as the year kicks off:
The age at which required minimum distributions (RMDs) from your IRA must generally begin, increased to age 72 from age 70 ½ . This change is effective for distributions required in 2020 and later years for those who reach 70 ½ in 2020 or a later year.
Contributions to your Roth IRA or Traditional IRA, up to $6,000 per person or ($7,000 if you are 50 or older), can still be made for 2019 until April 15th.
The information provided here is for general informational purposes only and should not be considered an individualized recommendation or tax advice. Consult your tax advisor for more information regarding your particular situation.
For more information regarding Powers Advisory Group, LLC, please visit our website at www.powersinvest.com or call us at 618-654-6262.