Well, a new year has arrived and with it new challenges and new opportunities! And after last years’ stellar performance in both stock and bond markets, investors are wondering where these opportunities can be found. Attached <here> is an article from Dimensional which stresses that chasing returns based on trying to guess what sectors or economies are going to outperform simply doesn’t work. Rather, their philosophy (which resonates completely with ours) is that a better investment outcome derives from constructing portfolios to emphasize those drivers that statistically can be shown to produce better results over time. This includes globally diversified investment funds comprised of small and mid-capitalization companies that trade at a discount relative to their intrinsic value and have higher profitability. This, together with lower management fees combine to offer investors an investment approach that does well through all market cycles.
That said, the view from 5000 ft is helpful nonetheless, and as always The Economist magazine offers some informed insights for the year ahead. On the whole, their economic forecast is mixed -but more positive than negative. The consensus is that global economic growth with continue, albeit at a somewhat slower rate and that headwinds could well result in even lower growth yet. But no talk of recession, although it is key to remember that markets are leading indicators not lagging ones. This means they could correct in 2020 if recession is expected in 2021.
Whatever the year holds, always remember that your nest egg is managed in a moderate risk portfolio emphasizing a balance of capital growth with capital preservation tailored to your investment objectives. Charting your financial future for what comes next is what we remain deeply committed to and we look forward to working with you throughout the year and into the future.
Hope you and your families had a great holiday season and Happy New Year!