How Might The Market Behave In 2020?

By Jeff Gilbert

This January, we find ourselves in a much different place than we did a year ago. Last year came on the heels of a difficult December, where the market dropped precipitously over recession worries. Then the market surprised everyone with a stellar performance in 2019. Are we in for a repeat performance in 2020?

Less Room For Market Growth

Most experts are not expecting the same kinds of returns in 2020 that we saw in 2019, mainly because we’re starting in a very different place. With such a difficult December in 2018, the markets had plenty of room for improvement in 2019. There simply isn’t as much room for growth in 2020, as we are starting out near record highs on the tail of a strong year for both stocks and bonds worldwide.

For example, stocks are more expensive this year than they were last year. One way that is measured is by comparing a stock’s price to profit over the preceding year. Right now, the S&P 500 is trading at 21.1 times its earnings. Last year at this time, it was trading at 16.5 times earnings and the average over the last 2 decades was 17.7 times earnings. (1) We’re starting in a much better place this year, so there just isn’t as much room for growth.

Low Recession Risk

Even though you shouldn’t expect a repeat of 2019’s amazing gains, that doesn’t mean you need to worry. The economy is still growing, chugging along at a modest rate. There is little risk of a recession in 2020, especially with the progress made on U.S.-China trade and the Federal Reserve’s commitment to keeping interest rates low. One of the biggest unknowns for 2020 is how the presidential election will impact the economy, but with a strong foundation, the impact should not be great.

Analysts are expecting continued growth for 2020 and this next decade, though at slower rates than we saw last year. Vanguard forecasts American stocks to return 3.5% to 5.5% gains over the next decade, which is much lower than we have seen recently. (2) Even if gains are lower, they are still expected to be positive.

How You Should Respond

What does all of this mean for you practically? First of all, it is important to remember that neither I nor the Wall Street analysts have crystal balls, and any predictions you hear are merely guesses. None of us know for certain what the future holds. No one predicted that 2019 would be the S&P 500’s best year since 2013. (3) We are just making educated guesses and there is no guarantee that what we expect will actually happen.

In light of that, it is important to have a balanced investment strategy that takes into account all possibilities. A well-diversified portfolio crafted with your specific time horizon in mind should be able to meet your needs whether the market returns 2% or 20% in 2020. 

The greatest danger in prosperous times like these is for investors to become complacent or greedy and ignore the proven principles of long-term investing. If you want to make sure that your portfolio is prepared for whatever 2020 has in store, you can complete a complimentary risk assessment here or give me a call at 949-445-1465 or email me at jgilbert@balboawealth.com.

About Jeff

Jeff Gilbert is the founder and CEO of Balboa Wealth Partners, a holistic financial management firm dedicated to providing clients guidance today for tomorrow’s success. With nearly three decades of industry experience, he has worked as both an advisor and executive-level manager, partnering with and serving a diverse range of clients. Specializing in serving high- and ultra-high-net-worth families, Jeff aims to help clients achieve their short-term and long-term goals, worry less about their finances, and focus more on their life’s passions. Based in Orange County, Jeff works with clients throughout Southern California as well as Arizona, Oregon, and Washington. To learn more, connect with Jeff on LinkedIn or email jgilbert@balboawealth.com

Advisory services provided by Balboa Wealth Partners, Inc., an Investment Advisor registered with the SEC. Advisory services are only offered to clients or prospective clients where Balboa Wealth Partners and its Investment Advisor Representatives are properly licensed or exempt from registration.

Securities offered through Chalice Capital Partners, LLC, member FINRA, SIPC.

Balboa offers advisory services independent of Chalice. Neither firm is affiliated.

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(1) https://www.nytimes.com/2020/01/01/business/wall-street-markets-2020.html

(2) https://www.nytimes.com/2020/01/01/business/wall-street-markets-2020.html

(3) https://www.nytimes.com/2020/01/01/business/wall-street-markets-2020.html

Are You Ready For A New Year? 5 Steps To Take Before You Say Hello To 2020

By Jeff Gilbert

This year (and decade!) is quickly coming to a close, and if you’re like most Americans, you spend the month of December neck-deep in Christmas parties, shopping for gifts, and planning for travel. You might think that managing your finances can wait as you deal with the holiday busyness, but since finance-related resolutions consistently fall in the top five most popular New Year’s resolutions, (1) why don’t you give yourself a head start on your 2020 financial goals? Here are 5 critical financial actions you’ll be glad you tackled when the ball drops on New Year’s Eve!

1. Celebrate Victories And Set New Goals

What financial goals did you set when you rung in 2019? Did you stay on top of those goals or did they get swept under the rug? Take this time to reflect on the past year and mark how far you’ve come, celebrating your progress, no matter how small! Then evaluate your saving and spending from the past year, set some new goals, and adjust your financial plan, taking into account any life changes such as marriage, relocation, or a job change. 

2. Bump Up Your Savings

If possible, max out your contributions to your 401(k) by the end of the year to make the most of your retirement savings. For 2019, you can contribute as much as $19,000 (or $25,000 if you are age 50 or older). Remember, these are your contribution limits and any employer match would be in addition to this. You might also consider contributing to a Roth IRA. For 2019, you can contribute as much as $6,000 (or $7,000 if you are age 50 or older). Finish the year strong by investing in your future!

3. Take Advantage of Your Employer Benefits

While every employer has different rules that apply to the benefits they offer their employees, many benefits expire or reset at the end of the year. You work hard for these perks, so be sure to use them!

Medical and Dental Benefits

At the beginning of 2019, did you have good intentions of taking care of some dental work, blood tests, or other medical procedures lingering on your to-do list? Now’s the time to take advantage of all your healthcare needs before your deductible resets. Dental plans in particular often have a maximum coverage amount. If you haven’t used up the full amount and anticipate any treatments, make it a priority to set an appointment before December 31st.

Flexible Spending Account

Like your health insurance benefits, you’ll want to use up as much of your FSA (flexible spending account) dollars as possible by the end of the year. You are only allowed to carry over $500 to the next plan year. Check the restrictions on your account to see what the money can and cannot be used for, and take care of any needs you may have as allowed by your plan.

Sick and Vacation Time

Depending on your company, your sick or vacation time might expire at the end of the year. Check with your HR department to learn about any expiration dates. If it does expire, fit in a last-minute vacation or even a staycation. If you need to make any trips to the doctor in the near future, schedule those appointments now to make use of these benefits before you lose them.

4. Make Some Updates

To your estate plan and insurance coverage, that is. If you have taken the time and energy to create an estate plan, you’ll want to check in periodically to ensure all the documents are up to date and no major details have changed. Any significant life event is a good time to think about updating your estate plan documents. If you change any of the beneficiaries in one place, such as a life insurance policy, make sure that they are consistent with the other documents so that there is no confusion. 

Your insurance needs may have changed as the year has gone on, which is why it’s important to regularly review your insurance coverages and your designated beneficiaries to make sure they are up to date and reflect your current financial situation. For example, if you’ve paid off debt and your youngest child has just graduated from college, you may not need as much life insurance coverage since your family’s needs and liabilities have decreased. You might also want to evaluate your need for other types of insurance you may not currently have, such as long-term care insurance.

5. Give, Then Give Some More

If gifting is one of your long-term financial goals, it’s never too early to start planning for the legacy you want to leave your loved ones without sharing a good portion of it with Uncle Sam.

Each year you can gift up to $15,000 to as many people as you wish without those gifts counting against your lifetime exemption of $11.4 million. If you’ve yet to gift this year or haven’t reached the $15,000 limit for a particular recipient, make sure you do this by December 31st.

If you’re planning to itemize deductions on your 2019 tax return, be sure to make your charitable contributions before the end of the year. This includes donating appreciated securities, which may help you avoid paying taxes on the gains. Along with your other tax documents, find and organize any receipts you have from donations to charities, whether made in cash, as a securities contribution, or other type of gift.

End The Year Strong

Which of these steps do you need to take before the ball drops on New Year’s Eve? Our team at Balboa Wealth Partners would love to help you finish the year strong and set you up for a successful 2020. Give me a call at 949-445-1465 or email me at jgilbert@balboawealth.com to get started today! 

About Jeff

Jeff Gilbert is the founder and CEO of Balboa Wealth Partners, a holistic financial management firm dedicated to providing clients guidance today for tomorrow’s success. With nearly three decades of industry experience, he has worked as both an advisor and executive-level manager, partnering with and serving a diverse range of clients. Specializing in serving high- and ultra-high-net-worth families, Jeff aims to help clients achieve their short-term and long-term goals, worry less about their finances, and focus more on their life’s passions. Based in Orange County, Jeff works with clients throughout Southern California as well as Arizona, Oregon, and Washington. To learn more, connect with Jeff on LinkedIn or email jgilbert@balboawealth.com

Advisory services provided by Balboa Wealth Partners, Inc., an Investment Advisor registered with the SEC. Advisory services are only offered to clients or prospective clients where Balboa Wealth Partners and its Investment Advisor Representatives are properly licensed or exempt from registration.

Securities offered through Chalice Capital Partners, LLC, member FINRA, SIPC.

Balboa offers advisory services independent of Chalice. Neither firm is affiliated.

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(1) https://vitagene.com/blog/most-popular-2019-new-years-resolution/