Stocks broke out to all-time highs in the 4th quarter, after spending the prior three
quarters struggling to meaningfully eclipse the previous highs set in October 2018.
Even if we had been granted the magical opportunity to read last year’s headlines
in advance, our guess is that most of us would have vastly underestimated equity
market returns in 2019. The S&P 500’s gain of more than 31% last year represented
its 11th-best calendar year return since the Great Depression, and soundly beat out
almost all professional return forecasts. To say the least, last year’s returns were
a pleasant surprise to most investors, especially given slowing global economic
growth, the vigorous (and seemingly never-ending) U.S.-China fight over trade
and tariffs, the Trump impeachment saga, turmoil in the Middle East, and sluggish
corporate earnings growth.

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