Instead of a weekly best content post, I decided to offer a 2018 annual market review.
The table below shows the 4th quarter and 2018 returns for some of the major indexes.
Get the full report here – 2018 Annual Market Review
Here's how we ended the year.
|Index||Q4 2018 Return||2018 Return|
|US Stocks (Russell 3000)||-14.26%||-5.43%|
|US Small Value (Russell 2000)||-20.29%||-11.12%|
|US Real Estate (Dow Jones US Select REIT)||-7.16%||-4.22%|
|US Bond Market (Barclays US Aggregate Bond)||1.64%||0.01%|
|International Stocks (MSCI EAFE)||-12.54%||-13.79%|
|Emerging Markets (MSCI Emerging Mkts)||-7.63%||-15.31%|
The report is broken down by market segment (US Stocks, International, emerging markets, etc.). As you look through the stock indexes, you will see that no area was immune to the downturn.
The bond market provided some cushion for the drop in stocks, but it was still a rough last quarter and year.
International and emerging markets got hit especially hard. These same areas contributed to outperformance during the three years ending in 2017. I believe that will happen again whenever the market recovers. There were no stock asset classes that had a positive performance for the year. Small cap and value in the U.S. and international markets were among the hardest hit.
Relative to 2000-2003 and the crisis of 2007- early 2009, this drop is relatively benign. However, I know going through this is not easy. Electronic (programmed) trading causes the ups and downs of the markets to be bigger and quicker than ever, which can add to the anxiety.
Get the report here – 2018 Annual Market Review
How to respond
If you are a long-term investor (if you're in stocks you should be) be patient and stay with your plan. Do you have cash? Then consider investing more in the areas that have dropped the most. What about a rebalancing strategy? Do you have one? If so, look for opportunities to rebalance. Did you freak out in the last quarter and considered pulling the trigger and selling stocks? Maybe it's time to reevaluate your risk tolerance.
Panic is not our friend when it comes to investing. Hang in there. Stay the course. Evaluate your investments in line with your plan for the money. Don't have a plan? By all means, start one now. That should be the backbone of all of your investments.
Now it's your turn. How did you fare last year? Are you going to stay the course? Did you invest more? Was this your first negative period since you began investing?