Quarterly Investment Update

Economic data remains mixed and trade tensions linger, but most investments continued their upward climb for the third quarter.

U.S. stocks rose modestly, posting a third consecutive quarter of gains and boosting year-to-date returns above 20%. U.S. Real Estate added 7% for the quarter, rising more than 27% for the past nine months. Bonds were also positive, bringing 2019 to high single digit returns. International stocks were the lone disappointment, posting modest losses as a global slowdown and strong U.S. dollar both had a negative impact.

With Fed chairman Powell and other observers commenting on current “risks” for the U.S. economy, it is worth reviewing the relationship between stock market performance and recessions. It’s a complicated picture, made worse by the fact that the start and end of a recession are generally not identified until well after the fact. Nevertheless, a recession certainly does not signal the death knell for stocks.

Here are a few quick facts about the twelve U.S. recessions in the past 80 years:
  • The average recession lasted 11 months (the shortest being 6 months, the longest 18 months)
  • The average performance for the 3 months leading up to a recession was positive 1.0%
  • Stocks averaged a gain of 5.6% during a recession
  • One recessionary period (‘07-‘09) had double-digit stock losses, but five had double-digit gains

The simple takeaway is that even accurately predicting the timing of a recession doesn’t provide help regarding stock market forecasting. Each market cycle has unique circumstances and behavior.

As you might expect, our advice remains the same – stay the course! Your asset allocation is designed to address the unknown future, and provide a good balance between growth opportunities and potential market turmoil. Rest easy… it’s already part of your plan! 

Warm regards,

The LPP Team
Life Planning Partners, Inc.