The Markets About face! 2019 was a remarkable year for investors with many asset classes delivering positive performance. Both the Standard & Poor’s 500 Index, a gauge of U.S. stock market performance, and the Dow Jones Global (ex U.S.) Index delivered double-digit increases (see the below table). Bonds and gold rallied, too, delivering positive returns for the year. Possibly the most important factor contributing to asset performance in 2019 was an ‘about-face’ by the United States Federal Reserve. Axios reported: “The Fed’s 180-degree turn was the story of 2019, asset managers and market analysts say…Chairman Jerome Powell and the U.S. central bank went from raising interest rates for a fourth time at the close of 2018 and giving market watchers the explicit expectation this would continue in 2019, to do the opposite. The Fed cut rates thrice and even began re-padding its balance sheet in the last quarter of the year, bringing it back above $4 trillion.” The Fed’s policy decision gave investment markets a boost, however, it did little to quell investors’ worries about potential recession and the impact of the U.S.-China trade war, reported The Wall Street Journal. As a result, investors moved money from U.S. stock markets into bonds and other investments they perceived to be safer throughout the year. During the fourth quarter of 2019, U.S. markets delivered positive returns despite uncertainty about the strength of the U.S. economy created by inconsistent economic data. For example, the last jobs report of the year indicated unemployment remained near a 50-year low. Yet, in 2019, workers experienced the highest number of layoffs in a decade. Many layoffs during the year were the result of corporate bankruptcies, especially in the retail sector. Investors who took time to evaluate the juxtaposition of unemployment levels and layoffs may have recognized disruptions in the retail sector has the potential to create opportunities for investors. A closely watched indicator during 2019 was manufacturing. In December, Fox News reported, “The ISM Manufacturing Index fell for the fifth month in a row to 47.2 in December, down from November’s reading of 48.1. That’s the weakest reading since June 2009, when it hit 46.3, and well below the 49 reading that economists surveyed by Reuters expected.” One of the reasons for weakness in manufacturing is the U.S.-China trade war. Late in the fourth quarter, concerns about trade subsided after the announcement of a phase one trade deal. The agreement is scheduled to be signed on January 15, 2020. Continued progress in resolving the trade war could help boost economic growth in the United States. At the end of 2019, the United States gross domestic product, the value of all goods and services produced in the country, was expected to remain slow and steady during 2020. However, forecasters at the Federal Reserve Bank of Philadelphia expected the economies of nine states to contract during the first six months of the new year. From a geopolitical perspective, the 2020s are beginning just like the last decade did, with all eyes on Iran. In 2009 and 2010, the Iranian Green Revolution captured the world’s attention as social media provided insight into post-election turbulence and unrest in Iran. Last week, the first of the new decade, all eyes were again on the Middle East as tensions between the United States and Iran flared after the death of a top Iranian military leader targeted by the United States. After rallying on the first day of the new decade, some major U.S. stock markets declined on news of heightened tensions in the Middle East and concerns about the potential consequences, such as the disruption of oil supplies.
A Path to Setting and Reaching Your 2020 GoalsWhat if you focused on your system instead of just your goals?Setting goals for a new year can feel overwhelming. We all know that resolutions don’t last, but we also feel the energy that comes with a new year of possibilities. Here’s a clearer path for setting and reaching your goals. Many of us love complex processes. Intricacies of a large spreadsheet really get our brain going and we can spend lots of time deeply analyzing financial questions. Maybe. But when we try to apply the same level of study to setting goals, it never works out. We try spreadsheets and software and Gantt charts to lay out goals in detailed sequences and it just doesn’t click. We never understand why. What is Your System? Maybe it’s time to try something different, like what is passed along in personal coach James Clear’s excellent writings on setting aside goals to focus on systems in which he discusses the difference between goals and systems. “If you’re a coach, your goal is to win a championship,” Clear writes. “Your system is what your team does at practice each day. If you’re a writer, your goal is to write a book and your system is the writing schedule you follow each week. If you’re an entrepreneur, your goal is to build a million-dollar business and your system is your sales and marketing. “Now for the really interesting question,” he adds. “If you completely ignored your goals and focused only on your system, would you still get results?” Yes, says Clear, who can help spark new thinking in us regarding this year’s goal setting. Let’s create our own goal-setting template with just three short sets of questions.
Review 2019’s SuccessesWhat did you accomplish in 2019? Personally? Professionally? What were the year’s successes? Large and small, all your successes build toward your long-term vision. Put your achievements on paper and remind yourself what you did accomplish last year. We all dwell on what we didn’t accomplish more than on what we did, so take a few minutes to counter that natural tendency and prime your goal-setting mechanisms.
Plan 2020’s SuccessesWhat would you like to accomplish in 2020? Personally? Professionally? Give your imagination some space and think about what you want done by the time you sit down at your desk in the first week of 2021 and look back at another successful year. Write down these 2020 goals and think about how you’ll feel when those turn into accomplishments on 2020’s success list.
What do You Need to Succeed?What do you need to do to accomplish your 2020 goals? Skills to learn? Habits to acquire? Put the first page on your left and put the second page on your right. Place the third page, with these questions, in the middle and let your brain connect your positive past to your envisioned future. What must you do to make those goals reality? What habits and skills do you need to develop? What connections do you need to make? What activities should you try? Like Clear advises, focus on systems and habits. Most of us love setting goals and thinking about the future. But our biggest area of improvement could be building systems that support those goals and the positive changes we want to make. Focus on building positive habits toward the goals that you seek for yourself, your family and your business. As your financial advisor, I look forward to celebrating your 2020 successes.