Semi-Annual Investment Memo

Ben Waller, CFA, CFP® |

We hope that you and your families had a happy holiday season and New Year!


Equity markets fell broadly in the second half of 2018. For the first time since 2008, the S&P 500 ended the year in negative territory, falling 4.38%. Large US companies performed better than small US companies, and US equity markets fared better than their International counterparts.  


While it is always difficult to watch account values fall over a short period, we remain steadfast in our belief that equities present the best opportunity for investors to grow their wealth over time. Investors are rewarded commensurately for taking prudent risks. Equity markets can and do experience losses from time to time. Our best advice has always been to remember that stocks are most appropriately held as long-term investments. Even with the recent losses, US equity investors have still been well rewarded over time, with the S&P 500 rising 8.5% annually over the past 5 years, 13.12% over the past 10 years, and 7.77% annually for the past 15 years running. Please remember to fall back on this longer-term perspective when doubts and fear arise. Those investors who have continued to own stocks, despite uncertainty, were rewarded immensely for the risks they took.   


Our strategy regarding the equity markets has not changed due to the recent increased volatility we have experienced. The beneficial qualities of owning stocks have not changed in our opinion. We continue to invest in equities with a long-term focus. For those investors for whom stocks remain appropriate, we have not adjusted our thinking. As always, please contact us if you have concerns or if your circumstances have changed.


U.S. fixed income indices rose in the second half of 2018 and were slightly positive for the year. The Federal Reserve (Fed) raised their target interest rate four times in 2018. The Fed cited strong economic data as justification for increasing short-term rates. However, additional rate hikes in 2019 remain unclear and the Fed has indicated that they will proceed based on prevailing economic conditions. Our strategy regarding fixed income investments has not changed. We continue to manage fixed income portfolios in a manner that reflects the circumstances of each client. Please contact us directly to review your fixed income allocation if applicable.


Finally, please let us know how we can help assist you with your charitable giving. The Tax Cuts and Jobs Act of 2018 has made charitable giving more nuanced from a tax perspective. For those clients over the age of 70 ½, giving charitable gifts directly from an Individual Retirement Account (IRA) is a compelling option. There are other solutions for clients in different circumstances, such as Donor Advised Funds or giving appreciated stock positions. Please contact us to discuss these options or any other concerns that you may have.