Stock Market in General
To put it mildly, most asset classes have been on a tear for the first half of the year. When I look across the array of Vanguard equity ETFs in our portfolios, the worst performer is FTSE AW ex-US Small Cap (VSS). The return year-to date through June was 12.16% The highest performer was the Vanguard Growth (VUG) at 22.44%.
Wrestling our Fears
For all the chariots that are barreling down Wall Street in a positive way, there is also an awful lot of fear. It seems like no matter how well the markets are doing, there's always a spoiler to take the fun out of making money over the long term.
I empathize with your concerns. The trade war with China creates a tension (and a lot of news), that is almost palpable. However, based on what I've seen, the U.S. cannot continue to roll on glassy eyed and lackadaisical without a more evenly dispersed trading policy with China.
This is going to cause some short-term pain, but I believe in the long run both sides will strike a deal that they can live with.
Inverted Yield Curve
Perhaps the biggest concern I have currently is the inverted yield curve. This happens when investors are able to get a better return over the short term than over the long term as related to bonds. The majority of time that this happens, this has been a negative harbinger of things to come. However, yield curves are not as newsworthy as Trump tweets about China. So you may want to log out of your Twitter or Facebook and go buy a copy of The Economist in order to get a better handle on the global economy.
Author outside of New York Stock Exchange: July 2019.
Extracting the Positives
Now for the good news. Unemployment is very, very low. When more Americans are working, more Americans are spending money.
The U. S. is still the one of the best places on the world to invest. I have been a fan of the emerging market economies since as far back as 2004 or 2005. I use to teach financial workshops on China, Brazil, and India back Pre-Financial Crisis.
However, there is a soul to investing in U. S. companies that—in my opinion—is second to none. And while I know that eventually this will change, I believe this change to be a generation or two down the road.
From now until the presidential election on November 3rd, 2020, the news is only going to escalate. Maybe it's time to insulate from some of the talk speak on the tube and hire a financial planner. It might do you a world of good. The time to prepare is always now.
Also, here is another article on how you can get started diversifying your 401(k)-- today. There is no time like the present! Above all, we recommend a long-term investment philosophy, spiked with a lot of reading and prayer. The first half of the year was great for investors, and it's perfectly normal to stop and celebrate once in a while when things have been this good.
Your 401(k) and the Efficacy of Asset Allocation
Three Ways to Prepare for a Stock Market Crash
Disagreeing with Warren Buffet: An Argument for Bonds
Charts and graphs contained herein should not serve as the sole determining factor for making investment decisions. All hypothetical scenarios are for illustrative purposes only.
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