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Key Takeaways, Fourth Quarter 2019
By Ralph Goldsticker, CFA | 22 January 2020
2019 was a year of surprisingly good returns, against a backdrop of slowing growth and ongoing political uncertainty. Most asset classes exhibited strong returns for the year; much higher than both expectations and long-term averages. Investors looked beyond the uncertainty as feared events did not materialize.
Equities
Global stock markets hit a series of new highs, despite repeated pessimistic headlines. Fears of trade wars and political conflicts appear to be overdone. Economic data remained positive.
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The broad US stock market returned 9.1% for the quarter and 31.0% for the year, its best annual performance since 2013.
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Developed international stock markets were up 8.2% for the fourth quarter, and 22.0% for the year, while emerging markets were up 11.8% for the fourth quarter and 18.4% for the year.
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The difference in P/E ratios between growth and value stocks is as wide as it has been since January 2001, just after the bursting of the Tech Bubble.
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Fixed Income
The markets for both investment-grade and high-yield bonds exceeded expectations. Economic and fundamental expectations improved, and were supported by monetary policy.
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The broad US bond market returned 8.7% for the year, despite being almost flat (0.2%) in the fourth quarter.
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Investment-grade corporate bonds were up 14.5% for the year, 8% ahead of Treasuries.