Markets “In a Nutshell” for January 30, 2019

Investment Week at a Glance

Stocks were mixed last week. The Dow Jones Industrial average gained 0.2% while the S&P 500 was down 0.2%. The New York Stock Exchange Composite (2,000 stocks) lost 0.2%. The “average investor’s index” (Value Line index) gained 0.1%. Foreign stocks (DJ Global ex U.S.) were up 1.1%. Bond yields dropped (bond prices up) as the 10 year Treasury ended at 2.75%. (Data sources: Barron’s Financial, Wall Street Journal)

What’s ahead in 2019?

Capital Group (management group for the American Funds) has published its 2019 outlook for the economy and markets. They see the U.S. economy in the late stages of the growth cycle. If interest rates continue to rise, expect more volatility in the U.S.  stock market as well as China and Europe. But with volatility comes opportunities. Capital Group sees opportunity in companies that will do well in a rising rate environment. Foreign stock markets, which have lagged the U.S. in recent years, can be a good way to diversify stock portfolios. Rising rates can be good for bond investors who are looking for income says the Capital Group.

Where can investors find income in 2019?

In the 1-7-19 Barron’s, Andrew Bary writes about the best places to invest for income. Number one is MLP’s (Master Limited Partnerships) which own energy pipeline stocks. MLP’s took a beating, dropping 55% from 2014 highs but now look to rebound. With dividend yields in the 9-10% range, MLP’s can also be a diversifier against general market volatility. We own MLP’s in our income and more conservative portfolios. Other income ideas include Telecom stocks, Utilities, and European dividend stocks.

Quiz:

As stated above, international stocks have lagged behind their U.S. peers. In the last 11 years, how many positive annual returns have international stocks had?

a. 1

b. 3

c.  6

d. 8

Answer is below…

 

Have a good week!

 

Answer to quiz:

c. 6 positive years.