4th Quarter 2018 – Year End Summary

January, 2019

Throughout 2018, volatility in the U.S. stock market caused some people to ask whether it was different this time. With breaking news regularly flashing across phones and TV screens, many found it difficult not to be drawn in to see what would happen next.

Investing for the long term is often compared to running a marathon. Disciplined runners do not abandon the course after a single bad stretch just as so many investors have achieved their financial goals by being globally diversified despite short-term fluctuations.

That said, it may not have been an easy year to feel good about being invested in a portfolio diversified across global stocks and bonds. Through the first nine months of the year, both bonds and international stocks had underperformed U.S. stocks by more than 12%.1

However, during the last three months of 2018, we were reminded why we hold a diversified portfolio. While the well-known S&P 500 Index fell 13.5% and the NASDAQ Composite Index fell 17.3%, many asset classes weathered the storm. Asset classes such as long-term U.S. Treasury securities were up 4.2%, U.S. aggregate bonds were up 1.6% with global real estate down 5.8% and emerging markets stocks down 7.5%.2

In the last two weeks of December, the S&P 500 continued to lose value. For 2018, U.S. markets (as proxied by the S&P 500) ended down 4.4%. By contrast, a diversified portfolio (as proxied by the DFA Global Equity Portfolio) ended down 11.5%. While we saw significant declines, these types of corrections are expected. To provide some perspective, a 20% correction has occurred on average once every 3.5 years.3

Staying Invested for the Long Term

It is precisely during periods like these that we step forward to take a long-term perspective. If we think back just one year to 2017, diversified investors cheered the benefits of diversification in a banner year. International stocks delivered a remarkable 27.2%, U.S. stocks delivered 21.8% and bonds delivered 3.5%.4

Even with such numbers in recent memory, the economic and geopolitical news that dominated headlines in 2018 increased uncertainty. When uncertainty increases, markets demand higher future returns for risky assets, meaning those assets need to have lower prices today. The most important thing to do as a long-term investor is be there when the upside happens. If history is any indicator, the upside can happen fast.5

We are here for you during calm and turbulent times. Please contact your advisor if you would like to have a conversation about recent market activity or your portfolio.

Sources

1 Bonds as proxied by the Bloomberg Barclays U.S. Aggregate Bond Index, international stocks as proxied by the MSCI All Country World ex USA Index (net div.), U.S. stocks as proxied by the S&P 500 Index.

2 Long-term U.S. Treasury securities as proxied by the Bloomberg Barclays U.S. Treasury Bond Index Long, U.S. aggregate bonds as proxied by Bloomberg Barclays U.S. Aggregate Bond Index, global real estate as proxied by S&P Global REIT Index (net div.), emerging markets stocks as proxied by the MSCI Emerging Markets Index (net div.).

3 Tim Mullaney, “8 Things You Need to Know About Bear Markets.” CNBC, August 24, 2015.

4 International stocks as proxied by the MSCI All Country ex USA Index (net div.), U.S. stocks as proxied by the S&P 500 Index, bonds as proxied by the Bloomberg Barclays U.S. Aggregate Bond Index.

5 Ben Carlson, “Buying When Stocks Are Down Big.” A Wealth of Common Sense, December 23, 2018.

6 Ibid.

Meet With Your Advisor

It is important to let us know when you have any changes in your investment objectives or financial circumstances. It is also important to review your account beneficiaries each year to make sure that no personal changes need to be made and the primary and contingent beneficiary designations are up to date and accurate. To notify us about any such changes that have occurred since we last met with you, please contact our office and schedule a meeting with your advisor.

We look forward to helping you stay on course.

 

Greg Feese, CRPC®
Financial Advisor

Mark Bailey
Financial Advisor

PR Wealth Management Group, Inc. a Registered Investment Advisor, doing business as Legacy Wealth Management Group of Las Vegas, LLC.  PR Wealth Management Group, Inc. only transacts business in states where it is properly registered or notice filed, or excluded or exempted from registration requirements. PR Wealth Management Group, Inc. and Legacy Wealth Management Group of Las Vegas, LLC. are not affiliated companies. The home office is located at 990 Avenue of the Cities, Suite 4., East Moline, IL. 61244. The Las Vegas branch is located at 8235 S. Eastern Ave. Suite 160., Las Vegas, NV. 89123. Before making investment decisions please call our office at 702.545.0680 to receive a copy of PR Wealth’s Advisory Agreement and Form ADV Part 2A, which includes PR Wealth’s fee schedule. This information is intended to serve as a basis for further discussion with your professional advisors. Although great effort has been taken to provide accurate numbers and explanations, this information should not be relied upon for making investment decisions. Web: www.Legacywmglv.com

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 Information is used with the express permission from Dimensional Fund Advisors. Dimensional Fund Advisors is an investment advisor registered with the Securities and Exchange Commission. Consider the investment objectives, risks, and charges and expenses of the Dimensional funds carefully before investing. For this and other information about Dimensional funds, please read the prospectus carefully before investing. Dimensional funds are distributed by DFA Securities LLC.

 Asset allocation and diversification do not assure or guarantee better performance and cannot eliminate the risk of investment losses. All investment strategies have the potential for profit or loss. Historical performance results for investment indexes and/or categories, generally do not reflect the deduction of transaction and/or custodial charges or the deduction of an investment-management fee, the incurrence of which would have the effect of decreasing historical performance results. There are no assurances that a portfolio will match or outperform any particular benchmark.

 Nothing in this publication should be construed as investment advice. All information is believed to be from reliable sources; however, its accuracy and completeness and the opinions based thereon by the author are not guaranteed and no responsibility is assumed for errors and omissions. Any economic and performance data published herein is historical and not indicative of future results. All rights reserved. Please consult your personal advisor and investment prospectus before making an investment decision.

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Legacy Wealth Management Group

Greg Feese CRPC®, Investment Advisor Representative.  Advisory Services offered through PR Wealth Management Group, Inc., a Registered Investment Advisor. PR Wealth Management Group, Inc., a Registered Investment Adviser, doing business as Legacy Wealth Management Group of Las Vegas, LLC.  PR Wealth Management Group, Inc. only transacts business in states where it is properly registered or notice filed, or excluded or exempted from registration requirements. This is not a solicitation for sale of securities in any jurisdiction.. The investment advisory representatives referred to on this site may only transact business, effect transactions in securities, or render personalized investment advice for compensation, in compliance with state registration requirements, or an applicable exemption or exclusion.

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