Welcome to 2020! How has it been 20 years since we rang in the new millennium! On December 31, 1999, the DOW set a then record high of 11,497. On December 31, 2019 the DOW closed at 28,538. That’s a pretty good return over those 20 years considering the litany of events that occurred!
2019 certainly generated a great return with the DOW up 22% and the broader markets up even more for the best calendar year since 2013. But remember, a lot of that performance was a recovery from the 15% decline in the last three months of 2018. The markets are only up about 7% from September of 2018 even with the big return for 2019.
The major drivers for 2019 were consumer confidence and lower interest rates. As we head into 2020, those catalysts appear to have continued strength. Consumer savings is double from just a decade ago and consumer debt relative to GDP is at its lowest level since 2003. Interest rates are certainly not expected to rise anytime soon either. Consequently, as we detailed in our weekly radio show/podcast from December 29, we expect 2020 to produce positive results for the markets on the upper end of the historical average of 8-10%. Stay tuned for how that plays out. For 2019, our annual tongue in cheek fearless forecast turned out to be 99.5% accurate!
As with any year, 2020 will have its share of volatility – we’ve already seen that just a few days into the year with the headlines swinging from the positive (a China trade deal to be signed later this month) to the negative (heightened Middle East tension). Please be sure to listen to our live show Sunday morning from 9-10 am on Newsradio WFLA Orlando or subscribe to any of our podcast or Youtube channels to stay informed along the way. Those social media channels can be found directly by going to the upper right hand corner of our website and just clicking on the icon that looks most familiar to you to become a subscriber.
The start of a new year also means that tax time will be upon us soon. While the tax changes are not as sweeping as last year, there are certainly many to be aware of so be sure to review our next blog post of the Top 10 Tax Changes of 2020. In particular, two of the major changes involved removing the age cap of 70 on being able to contribute to an IRA if you or your spouse are still working and increasing the required minimum distribution age to 72.