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2019 Market Wrap-Up


Ah, the year is officially over.  This means it is time to do a market recap of 2019.  Let’s get right to some of the more interesting bits of information I’ve read.

 

  • It was a good year for all the major US indexes. The S&P500 was up 29%, NASDAQ was up 35%, and the Dow was up 22%.  This was the Dow’s best year since 2017 and the best year for the other two since 2013.
  • Large Growth was the best US equity asset class for the year with returns of 36.4%. Small Value was the laggard with returns of 22.4%.  Slacker!
  • Since the market lows of March 2009 (remember those), Large Growth has had the best returns at 586.5%. Small Value is once again the “dog” with returns of 413.4%.
  • For the last two years, 28% of cash held by S&P500 companies has been used to buy back their stock. This has been the single largest expenditure and more than double what they are spending on research and development. Mmmm.
  • Even with the DotCom implosion and the Great Recession, 30 of the last 40 years have been positive in the market.
  • The current expansion is still at number one and has lasted 126 months.  This has happened with some of the lowest cumulative real GDP growth during an expansion.
  • Nearly 70% of GDP is presently consumption. I wish I had some historical data here to compare it to past periods, but I don’t.
  • The percentage of pre-tax national income continues to be focused toward the highest 10% income earners. Just over 50% of income is earned by the top 10%. It was in the low 30%s in the early 70s.
  • I don’t yet have 4Q data for cyclical sectors, but the 3Q data showed a slowdown in spending in residential investment, business fixed investment, motor vehicle parts and consumption, and private inventories as a percentage of the GDP. Definitely something to keep an eye on.
  • I’ll give you a pass on my banging the drum that we need more people to keep GDP going.
  • While unemployment numbers continue to hit lows, wages continue to trend upwards. Some states increased their minimum wages for the new year, so this trend should continue. Ohio increased our minimum wage a pathetic $0.15, which is less than 2%.
  • The Fed is predicting for 2020, GDP of 2%, Unemployment of 3.5%, and Inflation of 1.9%.
  • Of the major asset classes, Large Cap led this year with performance of 31.5%. REITs were just behind at 28.7%. The worst performing was Cash at 2.2%.
  • Since 1950, a 50/50 portfolio of half stocks and half bonds has averaged just under 9% a year in returns.
  • There is an interesting chart showing consumer confidence by political affiliation. Confidence by Republicans was in the single-digits from 2009 to 2013, when it slowly crept into the low teens. In 2017 it suddenly spiked to over 70% and is now at 79%. Democrats have not been above 45% since 2001 and are 33% now. It’s a freaky chart. If you want a copy let me know.