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Market Update January 2019



With this recent market rally, up about 12% on the S&P 500 since the December 24 close, I wanted to give an update on current market conditions. Since the 9/21/18 high of 2940 on the S&P 500, we are still down about 10% as of my writing this on January 17. That’s a fairly painful drop in about 4 months, but not too much different than the almost 12% pullback In January and February of 2018, or the 14% pullback from November through February of 2016. The peak-to-trough this time was worse, to be sure, but this one seemed to feel worse.


I think it felt worse because it felt out of control. There were no breather days, to speak of, and the selling just seemed to get worse every day. No one had a great answer for why it was so bad, and I think that’s because there was no ONE reason, but several reasons that compounded. The mid-term election brought with it the fear of impeachment; trade talks with China seemed to have no resolution; the Federal Reserve was raising interest rates; earnings estimates for US corporations were being ratcheted down for 2019; and the word “recession” started to get tossed around. Add those factors into a year when many investors had capital gains from stocks they had sold early in the year (or had gains distributed to them from mutual funds) and needed to sell stocks at a loss to offset those gains, and it created a nasty selling waterfall.


Really, the only one of those that has really changed is the tax-loss selling. Once the urgency of 12/31 disappeared, the selling pressure did, too, for the most part. However, we are still left with impeachment worries (assuming they ever re-open the government…maybe THAT’s why it’s still shut down!), trade and tariff concerns, lower corporate earnings estimates, and recession fears. Of those, I believe that the impeachment fear has been factored in. Trade gridlock has influenced future earnings and a potential recession, and the Fed seems to be a little less inclined to raise interest rates, or at least not to raise them as much as had been feared.


So I think that the S&P 500 will have trouble moving much higher than this, for now, at least. Investor expectations should probably be somewhere in the -10% to +10% range for 2019, meaning that we may already have seen ½ of our expected upside. For now, I think the wind is behind us, so I believe that downside is limited. I have mentioned this to many of you in phone conversations, but I think that mid-year is probably an appropriate time to consider de-risking your portfolio, from an investment standpoint. Of course, if you’ve already had us prepare a Signature Life Plan to help determine your optimal asset allocation, then that will be our starting point. If not, I encourage you to speak with us soon. As the saying goes, “Noah didn’t wait for the rain to start building the Ark.”


As always, these recommendations are mine, and may or may not be the same as those of Raymond James. This is not a solicitation to invest, although we do invite you to review your portfolio with us to see if any changes should be made.


Past performance may not be indicative of future results. There is no assurance any of the trends mentioned will continue or forecasts will occur. Investing involves risk including the possible loss of capital. Asset allocation and diversification do not guarantee a profit nor protect against loss.








The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. Individuals cannot invest directly in any index.  Index performance does not include transaction costs or other fees, which will affect investment performance.  Individual investor results will vary.  Dividends are not guaranteed and must be authorized by the company’s board of directors.   Every investor’s situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Sector investments are companies engaged in business related to a specific sector. They are subject to fierce competition and their products and services may be subject to rapid obsolescenceBloomberg Barclays US Aggregate Bond Index is a broad-based flagship benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market. There are additional risks associated with investing in an individual sector, including limited diversification. Investing in the energy sector involves special risks, including the potential adverse effects of state and federal regulation and may not be suitable for all investors.  The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Scott Mitchell and not necessarily those of Raymond James.  Expressions of opinion are as of this date and are subject to change without notice. Raymond James is not affiliated with and does not endorse, authorize, or sponsor any of the listed websites or their respective sponsors.  Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members. 

About Scott Mitchell

AAMS ®, Founding Partner SWS, Senior Wealth Advisor RJFS Scott is a cum laude graduate of Wake Forest University School of Business. He received additional training from the College of Financial Planning and earned the accreditation of Accredited Asset Management Specialist℠ as well as earning the Accredited Investment Fiduciary® designation.  Scott began his career at Southern National Bank. He then joined his father, Bob Mitchell, at First Union Securities for six years. At Signature, Scott directs investment strategy for the team and oversees the research and management of individual stocks, bonds and mutual funds. Scott lives in Florence with his wife and two children. He is a member and past President of St. Luke Lutheran Church, member and past President of the Florence Rotary Club, and on the board of directors of the Pee Dee Area Big Brothers and Big Sisters. Follow Scott on LinkedIn.

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