Quarterly Client Letter – 2019 Q4

By now, you’ve probably seen a few – or a few thousand– retrospectives on the past year and the past 10 years … with a few 20-year reflections thrown in.

Maybe it’s the nice, round new year number. (Although, technically, it may not be the dawn of a new decade until 2021.)

Maybe it’s the surprisingly strong 2019 returns, even though there was plenty of room for doubt throughout.

Or maybe it’s the wishful thinking that “2020” might finally offer us the perfect vision we’ve lacked so far.

Whatever the reason, it can be entertaining to reminisce about the year just ended and guess at what the next 12 months may bring. But, as Jeff Sommer of The New York Times said, “It is the time of year for predictions and I’ll make one: You will be better off ignoring the Wall Street stock-market predictions for 2020.”

We couldn’t agree more. It’s natural to enjoy a few flights of fancy when one round number gives way to another. In fact, it can be a wonderful time to revisit, renew, or redirect the personal aspirations you most want to achieve in the years ahead. For that, we remain by your side, ready to advise you on your recommended financial moves every step of the way.

But your investment outcomes depend far less on reacting to one or a few years and far more on embracing more durable insights. These are the ones that have been stress-tested across decades of market moves, and have rarely changed from one year – or even one decade – to the next.

In that context, here are three simple strategies we recommend for your 2020 investments: 

1. Trust that stocks have yielded more than bonds over time. A long-term perspective suggests this has occurred annually about two-thirds of the time.

Allocate some of your investments to stocks accordingly, and don’t waver in the years that don’t deliver.

2. Trust too that stocks won’t always outperform. There’s that roughly one-third of the time that their annual returns have disappointed. And if there is a 2019 lesson to be learned, it’s that we cannot predict which years will fly or flop. We believe it’s safe to say that hardly anyone foresaw such a strong, continued U.S. stock surge around this time last year.

To combat your personal doubts in the face of financial uncertainty, remain diversified across and within stock and bond asset classes, according to your financial goals and risk tolerance.

3. Trust in the quiet power of controlling what you can and ignoring what you cannot. Dimensional Fund Advisors’ David Booth said it well recently, as he reflected on 40+ years in the business: “If you’re living in fear of the next downturn, consider shifting your thinking instead of your investments.”

Lean on us as your fiduciary advisor to help you translate your ideal goals into financial plans that make sense for you, and to you, come what may in the markets.

We wish you all good things in 2020. More than that, we look forward to guiding you through whatever the year has in store, partnering with you to convert your wishes into achievements.

As always, please let us know how else we can help.

Regards,

Excel Financial

Excel Financial is registered as an investment advisor with the United States Securities and Exchange Commission (SEC), and only transacts business in those states in which it is properly notice filed or in which it qualifies for an exemption or exclusion from notice filing requirements. Nothing in this material should be construed as a solicitation or offer, or recommendation, to acquire or dispose of any investment or to engage in any other transaction.