It is now 10 3/4 years into the bull market, 8 1/4 years removed from valuation lows, and 7 full years with only three down quarters registered from the S&P 500 and two down quarters from the Russell 1000 Growth Index. Passive equity flows are still climbing, private equity dollars are swelling, and the amount of negative yielding bonds remains at historically high levels.
U.S. consumer spending has been good, unemployment is low, and inflation has not been a clear and present danger. The China trade war has hurt global manufacturing and fears of a slowdown and effective jawboning prompted the Fed to pull an about face, lowering rates deep into an economic cycle. We highlighted the drop in the ten-year bond in our last correspondence, and while long rates have started to creep up, they remain well off last year’s levels.
2019 was a good year for markets and your portfolios and it was a year driven more by multiple expansion than earnings. Rarely do we see your portfolios move in lockstep with earnings, with some years returns lagging and other years results running ahead of profit growth.
To read more, download the full Fourth Quarter 2019 Investment Perspective.