{"id":821,"date":"2020-02-12T12:04:45","date_gmt":"2020-02-12T20:04:45","guid":{"rendered":"https:\/\/chaltenadvisors.com\/blog\/?p=821"},"modified":"2020-02-12T12:04:45","modified_gmt":"2020-02-12T20:04:45","slug":"chalten-investment-review-q4-2019","status":"publish","type":"post","link":"https:\/\/chaltenadvisors.ca\/blog\/chalten-investment-review-q4-2019\/","title":{"rendered":"Chalten Investment Review – Q4 2019"},"content":{"rendered":"

Welcome to the Chalten Investment Review for Q4 2019.\u00a0\u00a0 Risk takers were rewarded in the final quarter of 2019 as global stock markets rose significantly.\u00a0 Global trade tensions eased as China and the US signaled both countries were ready to move forward with Phase 1 of a trade deal.\u00a0 Economic data was fairly stable and therefore central banks remained relatively tempered with their policy response.\u00a0 Of course, with markets reaching ever higher, the doomsayers are out in force once again.\u00a0 Yes, there will be bad news and yes, there will be market downturns, sometimes quite sharp ones as we experienced most recently in Q4 2018.\u00a0 Downturns are an inevitable and unavoidable part of investing.\u00a0 Important to having a successful investment experience is the ability to ride through near term dips, shut out the noise and try to focus on the long-term.\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/em><\/p>\n

We think historical perspective can sometimes help.\u00a0 Dimensional Fund Advisors shared some of their own perspective recently which we think is worth passing on:<\/em><\/p>\n

\u201cWhen faced with short-term noise, it is easy to lose sight of the potential long-term benefits of staying invested.\u00a0 For investors, it can be easy to feel overwhelmed by the relentless stream of news about markets. Being bombarded with data and headlines presented as impactful to your financial well-being can evoke strong emotional responses from even the most experienced investors. Headlines from the \u201clost decade\u201d (for US stock market, generally accepted as 1999-2009)\u00a0can help illustrate several periods that may have led market participants to question their approach.<\/em><\/p>\n

May 1999: Dow Jones Industrial Average Closes Above 11,000 for the First Time<\/em><\/p>\n

March 2000: Nasdaq Stock Exchange Index Reaches an All<\/em>\u2011<\/em>Time High of 5,048<\/em><\/p>\n

April 2000: In Less Than a Month, Nearly a Trillion Dollars of Stock Value Evaporates<\/em><\/p>\n

October 2002: Nasdaq Hits a Bear-Market Low of 1,114<\/em><\/p>\n

September 2005: Home Prices Post Record Gains<\/em><\/p>\n

September 2008: Lehman Files for Bankruptcy, Merrill Is Sold<\/em><\/p>\n

While these events are now a decade or more behind us, they can still serve as an important reminder for\u00a0investors today. For many, feelings of elation or despair can accompany headlines like these. We should remember that markets can be volatile and recognize that, in the moment, doing nothing may feel paralyzing. Throughout these ups and downs, however, if one had hypothetically invested $10,000 in US stocks in May 1999 and stayed invested, that investment would be worth approximately $28,000 today.<\/em><\/p>\n

When faced with short-term noise, it is easy to lose sight of the potential long-term benefits of staying invested. While no one has a crystal ball, adopting a long-term perspective can help change how investors view market volatility and help them look beyond the headlines.\u201d<\/em><\/p>\n

Q4 Market Review <\/u><\/em><\/p>\n

Again, the Bank of Canada decided not to change its benchmark interest rate, keeping it steady at 1.75% despite the fact that the US Federal Reserve cut interest rates once again during the quarter.\u00a0 Perhaps this policy difference drove the Canadian dollar higher against the US Dollar over the quarter, which was counterproductive for Canadian investors\u2019 US stock investments. \u00a0Government bond yields generally rose and prices fell.\u00a0 International stocks overall outperformed stocks from the other regions we track, driven by emerging markets stocks which flipped from the worst performers in Q3 to the best performers in Q4.\u00a0\u00a0 Small stocks with low relative prices (value stocks) outperformed large growth stocks over the quarter in Canada and the International region.\u00a0 In the US, while small cap stocks outperformed large cap stocks, growth outperformed value driven by strong continued outperformance of US technology stocks. \u00a0\u00a0<\/em><\/p>\n