2019 Mid-Year Investment Update – “For the Record”

As we conclude Quarter 2 and look forward to the remainder of 2019, the S&P 500 just posted its best first half market performance in 22 years. This comes on the heels of an extremely volatile Q4 2018 due to slowing global growth concerns, trade issues and tariff talks, and a flat/inverted yield curve that is driving concern of an upcoming recession. On Wednesday, July 10th, the S&P 500 crossed the 3,000 level for the first time in history.

Even though the markets are setting all-time record highs, investor sentiment is not trending equally high. According to the Forbes article titled “Investor Sentiment: Optimism Stays Unusually Low,” expectations among bullish individual investors remains at an unusually low level (23% compared to historical average of 38%). Conversely, pessimism remains at an unusually high level (43% compared to historical average of 30%). Historically, unusually low levels of bullish sentiment and unusually high levels of bearish sentiment have been followed by higher than median six-month returns for the S&P 500 index.

With summer in full swing, it is not unusual for the stock market to be a topic of conversation at barbeques or other social gatherings. The million dollar question always asked, “Is now a good time to invest?” The S&P 500 has logged an incredible decade. Should this impact investors’ allocation to equities? Exhibit 1 suggests that new market highs have not been an indication of negative returns to come. You can see the S&P 500 went on to provide positive average annualized returns over one, three, and five years following new market highs.













Over time, capital markets have rewarded investors who have taken a long-term perspective and remained disciplined in the face of short-term noise. By focusing on the things they can control (like having an appropriate asset allocation, diversification, managing expenses, turnover, and taxes) investors can better position themselves to make the most of what capital markets have to offer.

With the swift recovery in the markets year-to-date, we have taken the liberty to take profits off the table and rebalance most client portfolios. We want to make sure our client’s risk tolerance stays in line with their strategic allocations and keep the portfolios in balance in the case of any upcoming market volatility. Next year (2020) will be an important election year so we do not think volatility is going away any time soon. With more purpose behind how we setup our client’s asset allocation, we spent from fixed income investments last year which seemed to be the only asset class that was flat/positive. This year where mostly “everything” seems to be working, we generally have clients from equity profits to naturally rebalance their portfolios.

To provide an update on the various market performance through Quarter 2, please see below.

Please let us know if you have any questions about the recent market events or how to position your long-term financial plan for the months and years ahead.

Warms Regards,

Jerrod Ferguson & Vance Wealth Investment Committee


  1. Forbes – Investor Sentiment: Optimism Stays Unusually Low
  2. Dimensional Funds: Timing Isn’t Everything

The Dow Jones Industrial Average (DJIA), commonly known as “The Dow” is an index representing 30 stock of companies maintained and reviewed by the editors of the Wall Street Journal. The NASDAQ composite is an unmanaged index of securities traded on the NASDAQ system. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. The MSCI EAFE (Europe, Australasia, and Far East) is a free float-adjusted market capitalization index that is designed to measure developed market equity performance, excluding the United States & Canada. The EAFE consists of the country indices of 22 developed nations. The Russell 2000 Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index, which represent approximately 8% of the total market capitalization of the Russell 3000 Index. The Bloomberg Barclays US Aggregate Bond Index is a broad-based flagship benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market. You cannot invest directly in an index.

The views expressed in this commentary are subject to change based on market and other conditions. These documents may contain certain statements that may be deemed forward‐looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Any projections, market outlooks, or estimates are based upon certain assumptions and should not be construed as indicative of actual events that will occur.