Full Disclosure: I am not a certified financial planner, nor do I sell investments, insurance products, or other similar financial products. My goal in sharing this information is to shed light on a topic that few people understand well. It is my hope that this information will help inspire more people to climb the I Was Broke. Now I’m Not. Ladder (download a free copy HERE) and become wise investors so they can live fully funded lives.
=| 2019 INVESTMENT UPDATE |=
It’s that time of year again where I review my current investments and take a moment to philosophize about the future of investing.
My investing activity is driven by a powerful truth: “There is no HARVEST if you do not INVEST.”
As I prepare this report each year, I always take time to review previous updates I have provided. A statement made in my 2007 update bears mentioning again: “Many people are diversified WITHIN the stock market. It is also important to be diversified OUTSIDE of the stock market.” I encourage all investors to invest within the stock market, but to also explore other investments such as real estate, small businesses, franchises, or precious metals.
A reflection on my prognostications for 2018 – the year that was.
2018 Thought: “While I could be wrong, it is difficult for me to see major growth within the stock market in the near future.” This thought actually proved to be true! Indeed, the market declined across all the major indices. The Dow fell 5.6%. The S&P 500 was down 6.2% and the Nasdaq fell 4%. It was the worst year for stocks since 2008 and only the second year the Dow and S&P 500 fell in the past decade. (Source: CNN Article HERE)
I also believed the market would experience turmoil and roiling. With tariffs, the mid-term elections, and privacy issues becoming a prominent focus of investors, investments indeed experienced “turmoil and roiling.”
One of the most common questions we receive here at I Was Broke. Now I’m Not. is: “What investments do you recommend?”
My answer is always, “I don’t recommend specific investments. I can only tell you the investments I own, and they have worked well for my family. The investments you choose are up to you.”
Below is a chart of my current investments – click on the chart itself to download a printable version.
Throughout the year, I continued to actively trade stocks. I have sold several individual stocks (Wells Fargo and Rite Aid) and bought new individual stocks (Apple, Discover Financial Services, EventBrite, and SurveyMonkey). I also deepened my investment into several other companies. Overall, my investment strategy has continued on a straight-forward path of maintaining a diversified portfolio. However, my business holdings have outpaced the overall market pace which has created an imbalance in my portfolio.
2018 Balance: 32.64% real estate, 27.01% small business, 24.66% stock market and 11.57% cash.
2019 Balance: 18.10% real estate, 59.90% small business, 14.00% stock market and 6.90% cash.
NOTE: This imbalance is due, in large part, to a revaluation of our small business holdings.
My views of the investing market place for the next year:
- Turmoil, Roiling, and Churning will continue The overall Price-to-Earnings Ratios for all of the major indices are still at what I believe to be maximum acceptable levels. As a result, any market news will contribute to substantial volatility.
- Interest Rates will continue to moderate Based on my own research and experience, I believe the overall economy did enter a “mini-recession” in the three months of Nov/Dec/Jan. The market declined by more than 18% and there was a government shutdown for more than a month. This led to a “pausing” by the Federal Reserve in their steady movement upward of interest rates. As a result, I believe there is actually a high potential for interest rates to be held steady for the next twelve months with some potential for a decrease to be issued! This should help steady the housing and automotive markets as they are highly reliant upon favorable lending terms.
- There will be mild growth over the next twelve months The stock market recovered mightily over the first quarter of the 2019. I believe there is a chance for growth of around 4 to 5% over the next year. Contributors to this growth include: resolution of the Chinese tariff/trade challenge, interest rate moderation, and continuing economic expansion.
As always, I could be totally wrong. I welcome your thoughts, comments, and prognostications!
My favorite investment links I’ve encountered through the past year:
- Price-to-Earnings Update Site (provided by the Wall Street Journal)
- Compound Annual Growth Rate Calculator (provided by MoneyChimp)
Read previous installments of Joe Sangl’s “Current Investments” posts HERE.