Context Always Matters

Good Afternoon,

This week marked the start of the New Year, and along with that comes 2020 predictions on how the market will do. Some people try to hammer in a certain number while others try to assess the risk within the markets to develop a range of expectations of what could happen. Both approaches require some combination of art and science, and everyone has an opinion on which way is right. MarketWatch recently published an article about expectations for next year based on previous years when the various US stock market indices posted 20% returns in the previous years. The key takeaway from the article was that most of the time (more than 75%) the major US indices posted positive double-digit returns.

While this article leaves any reader feeling optimistic, the context behind the returns matters most along with how volatile the market was throughout the year. There are a host of things going on within the world today which could have either a negative or positive impact on our views. For example, no one could predict that the United States would eliminate a high ranking Iran Military official last week. What the outcome of this action has yet to be seen, but it does play a factor in how people think about the future which in turn impacts how companies and investors react. If anything, I hope it raises some awareness of why we must be aware of what is going on not just in the US but also in other countries.

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