With 2018 in the rear-view mirror and the first few months of 2019 behind us, what should we expect from the financial world for the rest of the year? Will it be the year we finally transition out of a bull market? What sectors are expected to over- and underperform? What can you do to prepare yourself and keep your wealth safe? If only we could predict the future. Thankfully, we can make educated guesses based on history and market trends. While there’s no crystal ball to show us what the market will do, and unexpected global and political events can throw a wrench into expected market cycles, here’s a big-picture look at what the market might do in 2019.
Bull Or Bear?
Good things don’t last forever—a saying that rings especially true when it comes to the market. We are still experiencing the longest bull market in modern financial history, and most analysts believe that this market cycle will continue throughout 2019. However, the market is expected to slow down near the end of the year as fear grows for a mid-2020 recession. Overall, the S&P 500 is expected to return single digits in 2019.,
Increased Interest Rates
While this is no surprise to anyone paying attention to the Federal Reserve’s actions, it is important to note that we will be seeing additional rate hikes from the Fed in 2019. The last interest rate increase we saw in December 2018 had the target range for the Fed’s benchmark funds rate going from 2.25% to 2.5%. After that meeting, we found out that the central bank officials now forecast two hikes this year, down from three rate raises previously projected.
It is important to note that the market saw dramatic drops during Secretary Powell’s press conference, hinting at investors’ worry about the Fed’s need to continue increasing rates.
What we must understand is that this process is a normal and healthy component of what makes our markets move forward. By looking at GDP growth, unemployment rates, and other economic indicators, the Fed uses its policy tools to do their best to stabilize the economy.
The Impact Of Politics
In addition to how markets respond to President Trump’s actions (and tweets), there are several major policy issues that have the potential to impact the markets in 2019.
First, we must certainly consider the trade war with China. The longer this goes on without a resolution, the more investors will squirm. This could lead to fear or panic. We have already seen some of the influence China can have on a large company like Apple, and we can only imagine what other consequences will result from trade war-related companies.
Next, with the election of 2020 looming, it will be interesting to see how the markets respond to the future candidates who throw their hat into the ring. While just knowing the future candidates doesn’t necessarily affect markets, the campaign messages and key policy initiatives that arise this year do have the potential to impact investor behavior.
How Can I Prepare?
We are nearing a turning point in the market. It’s impossible to predict exactly when it will happen, but you need to be prepared regardless. The good news is that with a trusted financial professional in your corner to guide you, you’ll not only survive the effects of market volatility and tumultuous politics, but you can even thrive. If you’re interested in learning more about where we see the market going in 2019 and how it may affect your investment portfolio or financial plan, contact me at (626) 529-8347 or email me directly at ricky@hbawealth.com.
About Haydel, Biel & Associates
Haydel, Biel & Associates is an independent financial advisory firm serving individuals and families near Pasadena, California. The firm was founded in 2004 by Chris Haydel and Ricky Biel with a desire to provide unbiased, client-centered, community-based financial advice. Together, they have built a practice that has grown into a family of caring, smart professionals committed to blending proven investment methodologies with creative financial technologies that make it easier than ever to accomplish your goals. They strive to keep things simple and fun to give their clients peace of mind and alleviate financial stress. HBA Wealth takes care of their clients’ needs first and foremost and goes the extra mile to make their clients’ finances grow. To meet and see how the HBA Wealth team may be able to help, contact them today at (626) 529-8347 or email Ricky directly at ricky@hbawealth.com.
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(1) https://www.ft.com/content/3c8475b4-f99f-11e8-8b7c-6fa24bd5409c