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Near the end of last year, I was asked by an acquaintance who knew I was a financial advisor, about what she should do with some cash she wanted to invest. I said at these low prices, she should buy equities. Buying stocks when they are low often does not feel good, but usually is the best thing to do.

Please forgive me for using the stock market over the last year as a teaching moment. Investing in the stock market is not for the faint-of-heart nor the compulsive. While seeing your money evaporate before your eyes (even if only on paper) feels terrible, the market reverts to the mean and is upward trending over a longer-term. Every year will not be a positive one but from 1950 to 2019, the market has only been down 15 times versus up 55 times, so the odds are in your favor. The problem is that long-term can seem interminable. My advice last year, imploring you to stay the course, may have sounded trite. However, it was absolutely the right call. Selling based on fear that grips our stomachs is not a good strategy and just produces potentially adverse tax consequences and lost profits. Timing the market to sell and buy lower is tricky, and usually results in buying back at higher prices. Frankly, emotional selling usually occurs near or at the bottom of the market, when you’re ready to throw in the towel, and just before a market turnaround. I am reminded of the words of one of the most famous investors of all time, Benjamin Graham: “The investor’s chief problem – and his worst enemy – is likely to be himself. In the end, how your investments behave is much less important than how you behave.”

This year recession fears started to recede. Instead, the market was buffeted by the progress or deterioration in the China – U.S. trade talks, with every tweet and headline, positive or negative, resulting in a corresponding surge or decline in stock prices.

December started on the downside, but accelerated positively as the month wore on, based on significant advances in the trade talks. The key date was December 15th, when additional tariffs were to be put into place by the U.S. On Friday, December 13th, the Chinese announced that they were working on a date to sign the deal. This would result in the U.S. lifting existing tariffs on Chinese goods in phases and lifting of the December 15th deadline, and the Chinese lowering tariffs on 859 products, from pork to semiconductors to pharmaceuticals. Anticipation of the consummation of the Phase One Deal was enough to send the market averages on an upward trajectory into the second half of the month. This optimism was well-founded, since U.S. officials announced on December 31st that they were just waiting for the Chinese translation of the 86-page agreement, and that President Trump was to sign the agreement on January 15th at the White House.

The presidential impeachment hearings did not seem to affect stock prices, but approval of the USMCA trade deal in the House and the Senate passing two spending bills to avoid a government shutdown had a salutary effect. Also contributing to the upswing in stock prices was an improving economy. U.S. business activity increased to a 5-month high in December, homebuilder confidence was at a 20-year high with new homes sales and prices unexpectedly increasing, and manufacturing improving. Most importantly, consumer spending (which accounts for over 2/3rds of the Government Domestic Product), was robust. Holiday retail sales were up 3.4 % from last year, with online sales increasing 18.8% over 2018.

All in all, December finished 2019 on an optimistic note, which was well-founded, as many investor fears did not materialize. Investors managed to climb a wall of worry over a growth slowdown, flat corporate profits, trade concerns, potential Impeachment, interest rates, and high valuations, and climbing stock prices followed.