What's going on?
Everyone loves a new record, and bond and stock markets sure were full of ‘em in 2019. But – and we’re sorry to keep bringing this up, WeWork – the year hit its fair share of bum notes too.
What does this mean?
Investors had a nervous start to the year after last December’s market selloff, but they needn’t have worried about going down that Old Town Road again: every major asset class delivered positive returns in 2019, from US stocks’ 28% gain to bonds’ 10%.
That was largely thanks to extra Juice from the US Federal Reserve, which went from planning to raise interest rates to actually cutting them – three times, no less. By making it cheaper to borrow money, the central bank boosted both America’s stock markets and bond prices (since bond yields follow interest rates). Forget that Cash Sh*t: it was a good year to be an investor.
Why should I care?
For markets: Bad Guy.
Things weren’t all good, though. As the US-China trade war continued to rage, investors did their best to keep up with a trade policy administered by tweet. It was a bad year for IPOs too, with Lyft, Slack, Uber, and Pinterest all dropping significantly after listing on the stock exchange. Their troubles pale in comparison to the Sugar Honey Ice Tea WeWork waded through, mind you: the coworking company lost $40 billion in value in just a few weeks, which may be remembered as the moment the tech bubble began to deflate.
The bigger picture: Stay High.
2019’s impressive returns have made up for last year’s selloff, but they likely wouldn’t have happened without it. Markets have simply been returning to where they sat before the dip: US stocks are, in reality, only up around 10% compared to September 2018. And next year might not provide the same kind of Motivation this one did, either…