Investing during the first quarter 2019 has been rewarding
Posted By RichC on May 1, 2019
Those of us invested or following the stock market either with individual stocks, mutual funds or ETF index funds have to be pleased with the rebound in the economy since December 2018. The first quarter has rewarded those who remained invested (so as long as they have been diversified) for the long haul.
Even with the inversion signal and long running bull market, the US economy continues to power higher. The trigger this spring was the Fed returning to a neutral from rising rate position. The longer term reason is that America is no longer punishing companies with higher taxes and onerous regulations making it more attractive to do business overseas. In fact, with President Trump’s tariffs and trade war, it is now far more attractive to manufacture in the US than most other countries. Add the tax cut, wages rising and low unemployment, consumers have a few more dollars to spend and less fear that another long lasting recession is on the immediate horizon.
The pessimist in me still worries. Our economy has always gone through up and down cycles and statistically we are overdue for a move down … hopefully small and painless. My biggest fear is from our heavy spending central planners in Washington DC be they Democrats or Republicans. President Trump for his part loves "easy money" and wants to goose the economy even more as the 2020 election approaches … and ridiculously is encouraging the Fed to lower rates by a full percentage point. Several Democrats (list of 23 below) running for president are far crazier in their rhetoric and obviously want even bigger government, higher taxes and some even a socialist takeover of some businesses. While I’m with them in being frustrated that healthcare is currently broken and the costs are ridiculous (as is higher education), a socialist takeover will not make it better or cheaper in the long run. Without competition, there’s no incentive to build a better or more efficient mousetrap.
As for now, those with an IRA or 401K … or investing in equities rather than fix income low interest accounts … have to be happy. If you own real estate in the right areas of the country, you’re also feeling pretty good. Let’s remember what worked in getting us to this point over the past few years and not rock the boat come 2020.
