After a difficult year in 2018, in the first month of 2019, the global equity markets delivered their best returns for the start of the year since 1987. Forget about the record arctic blast blanketing the Midwest making it the coldest in Chicago since 1985 or the fact that the Rams have not won a Super Bowl since the year 2000. Is this the beginning of major records for the year?
Since 1980 the stock market has averaged intra-year downturns of over 13%, yet had positive year-end returns approximately 75% of the time. So while 2018 was a tough year for equities, volatility is quite the norm for the investment world. When we look at the financial landscape this upcoming year we see modest economic growth domestically and globally. With the Fed, all but announcing a pause in interest rate increases, we think investors will gain more confidence in a more stable, yet slower economy.
If you are looking for more data to hang your hat on about the future, the New England Patriots play the Los Angeles Rams in the Super Bowl on Sunday. The Super Bowl Indicator is a superstition that says that the stock market’s performance in a given year can be predicted based on the outcome. If the team from the AFC (Patriots) win then it will be a down market, but if the team from the NFC (Rams) win it will be an up market. As of January 2019, the indicator has – a success rate of 80% as measured by the S&P 500 but for the last 4 years has gotten it wrong. Who are you rooting for?
-The Leisure Capital Management Team