What 2018’s Stock Plunge Tells Us About 2019

Just about every major asset class and investment choice ended the year in the red.

We all know the S&P 500 Index finished the year down over 6% — its worst annual performance in a decade.

Oil is also an asset I’m sure you noticed took a plunge, as prices at the pump were low across the nation this holiday season.

The only two assets that managed to climb out of a list of 11 major assets were real estate investment trusts (REITs) and the U.S. dollar.

Take a look:

With a 24.9% plunge, oil leads the list of lower assets.

Emerging markets and commodity indexes finished down over 10%. Bonds, gold and preferred shares all broke even at the end of the year.

It was a year where it’s safe to say that most investors didn’t make money.

The bearish atmosphere that besets the market can be frustrating. But as we start the new year, I come bearing good news — two down years for the S&P 500 is very rare.

Since 1929, the S&P 500 has declined two years in a row only four times. That’s it.

Those four declines occurred in 1929, 1939, 1973 and 2000.

However, when there are two down years, the trend is likely to last at least one more year. That’s because on three of those four occasions, the S&P 500 fell at least three years, but no more than four.

The market’s past behavior tells us 2019 is likely to be an up year for stocks, which can give you some peace of mind during any volatility that may linger from 2018.

I have been saying that now is a great time to buy the dip. This historical data continues to support that point of view.

Regards,

Chad Shoop, CMT

Editor, Automatic Profits Alert

Leave a Reply