Spring 2019 Investor Letter: Markets Rebound To Begin The Year

Stocks bounced back in the first quarter with the best quarterly start for the S&P 500 Index since 2009, up 13.5%, after a weak showing at the end of last year. We have said in the past that strength tends to beget more strength. LPL Research noted in a recent report that there have been ten other times since 1950 where the S&P 500 Index was up greater than 10% in the first quarter. In 9 out of 10 of those periods, the final three quarters were positive and in all 10 periods returns were positive for the year. The average gain in those final three quarters was 16.1%; however, the path was not straight and the average pullback was 11.7%.
As noted in the Spring 2019 Investor Letter, there will likely be a heightened focus on consumer related economic data as the second quarter unfolds. Based on current data it appears consumers and businesses are operating at a reasonable level. The data and related reports are not giving signs of a near term recession in spite of the recent 3-month/10-year yield curve inversion and discussed in more detail in the Investor Letter. Issues on the horizon that may impact the market continue to be the China trade and tariff situation. Also, the odds of a hard Brexit are rising; although we believe cooler minds will prevail and a negotiated solution is reached.
Thank you for your continued confidence and support in HORAN Capital Advisors and we are always available to answer any questions and discuss our outlook further. For additional insight into our views for the market and economy as the year progresses, see our Investor Letter accessible at the below link.

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