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Opening Statement from the January 2020 Intelligent Investor (part 1) 

Opening Statement from the January 2020 Intelligent Investor (part 1) 

Originally published on January 9, 2020

 

2019 in Review

Despite a disappointing year in earnings for the S&P 500, all three major US stock market indexes performed spectacularly well for the entire year marked by jaw dropping gains in Q4 2019, rivaling the performance in Q1 2019.

For the entire 2019 calendar year, the S&P 500 returned more than 28 percent recording its best year since the 30 percent gains in 2013. Meanwhile, the Dow delivered a very impressive 22 percent. Finally, the Nasdaq led all three major market indexes with eye-popping returns of 35 percent.

Much of the gains in the equities market were the result of increasing optimism of resolution to the trade dispute between the US and China, coupled with the Fed’s reversal in monetary policy from the more hawkish stance taken in 2018.

At the start of 2019 many investors were wondering if the bull market in stocks had finally ended after witnessing a severe selloff throughout Q4 2018. The selloff began in October 2018, and gradually progressed into a gut wrenching collapse in December highlighted by the market collapse on Christmas Eve. By the end of 2018, the three major market indexes had lost an average of nearly 6 percent amounting to the worst performance since the financial crisis in 2008.

The market correction in Q4 2018 was particularly worrisome for two reasons. First...

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