Last week, I posted on LinkedIn and Facebook that stocks had set a bottom, and I invested my cash along with reallocating funds from bonds into stocks on Wednesday of last week (December 26th). This turned out to be very advantageous timing for my clients. Those of you who follow my posts know I held large cash positions and bought fixed income securities, throughout 2018 waiting for a stock market correction. Beginning in early October after new all-time highs were set for stocks, the equities market entered a correct phase that has lasted until last week. With a bottom now set for stocks, we should see a rally to new, all-time highs above 3000 for the S&P 500, sometime in the first half of 2019. The trade/tariff war with China appears to be moderating, and the government shutdown should resolve shortly. Retail sales appear to have been strong over the holiday season, with Amazon reporting their best season ever, and retail sales overall at the best levels in six years. We will begin to see those earnings reports for retailers over the coming few weeks. Interest rates remain low, and the Fed should only raise rates once or twice this year, so we are very close to neutral rates now. The economy and employment remain strong, and I do not anticipate a recession occurring before very late 2019, but more likely in the first half of 2020. This overall economic landscape laws the foundation for the move to new highs for stocks.
I wish everyone a happy, healthy, and profitable 2019!