November 2019

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Kevin: Hello, Kevin Coyle and John Finley, November 7th 2019. Quick update on where we are at year-to-date on the markets.

John: Today the US market hit a new high, so it is up about 25% on the year. International developed stocks are up 17% and the emerging markets are up 13%.

Kevin: Now we’ve had a nice little bump since the end of the 3rd quarter but put that in the context of where we started the year after the decline in 2018. And going back maybe even early in the year of 2018.

John: Everyone remembers how ugly the 4th quarter last year was when stocks were down about 19% in the US. So we needed to recover from that but even if you go back to February 2018 compared to today, stocks are up only about 10%.

Kevin: Yes, so we have been in a range just shy of the last 2 years, had a nice little bump out where news seems to be better over the last 2 months. The challenge is to help folks to structure their affairs in these types of environments. It seems like in the last 10 years these markets have been climbing this wall of worry, people have been concerned about it even more so now. Stocks have gone up so much John, they have to go down.

John: Well, that’s one theory, that we’re in a bubble. We need to step back and ask ourselves; what actually drives stock prices higher?  The driver of stock prices are the earnings of those companies. We have had stocks triple since the end of the financial crisis but at the same time earnings have tripled as well. So the fundamentals have supported stock prices where they are today.