At the beginning of 2019, as after every annus horribilis, forecasters were cautious-even pessimistic. There was plenty on the menu, since the menu was made up of increased volatility on the financial markets (down as much as 20% on the S&P 500 in the last quarter of 2018), increased trade tensions -particularly between the United States and China-, uncertainty over Brexit, and above all, a slowdown in the world economy.

 

 

However, 2019 showed that whatever the ingredients of the anxiety-provoking cocktail, for the time being, stakeholders have maintained their confidence in central banks since they abandoned their desire for "normalization".

With this major theme of 2018 thus relegated to the drawers of the major monetary planners, 2019 may be remembered as a year where everyone wins.

2019: all lights green

Virtually all major asset classes saw their valuations increase.

 

 

Stocks, bonds, real estate, gold and mining: absolutely all the lights are green on the 100 largest US ETFs, which is about the opposite of what happened in 2018.

 

 

With a few exceptions, regardless of the country in which you purchased shares on January 1, 2019, by December 31, you have won.

 

 

In fact, unless you took a position on natural gas, you couldn't lose.

 

 

Historically outstanding performance

Special mention to the S&P 500, which recorded its 2nd best performance in more than 20 years...

 

 

...by stringing together a series of 35 historical highs, for a total of 242 over the 2010-2019 decade.

 

 

In the U.S. equity markets, only the 1990s saw more unbridled growth, with the S&P 500 stringing together like pearls historic highs to reach a total of 310, before the stock market crash of 2001-2002 set the record straight.

As in the 1990s, the spectacular performance of the U.S. equity markets in 2019 was driven by tech:

 

 

Note that all sectors of the S&P 500 posted double-digit returns. Over the past 20 years, this has already happened in 2003, 2009 and 2013, but by 2019, "all major asset classes have produced above-average returns [over the past 10 years], which has never happened before," as Jeffrey Kleintop of Charles Schwab & Co. notes.

 

 

On the NASDAQ, we haven't seen such a year (+39%) since 2009, and we are now at 11 years of uninterrupted positive performance.

 

 

The growth of this sector, whose valuation is concentrated in the hands of GAFAM, will have been driven in particular by Apple, whose valuation increased by 84% (sic) in 2019!

 

 

2019 will thus have been the best year since 1997 for an offensive 60/40 portfolio (60% US equities and 40% US bonds):

 

 

In short, the theme last year was "Party like it's 1999":

 

 

Raw materials were also at the party, with palladium exploding 56% in US dollars, oil rising 34% and an ounce of gold gaining 19% over the year.

 

 

In the end, it's only on the cryptos side that performance is split between tops and flops, Bitcoin having nearly doubled over the period.

 

 

At +20% in euros, gold is not to be outdone!

As you know, I am presenting these statistics in US dollars because that is the currency in which they are most readily available. However, we are primarily interested in performance expressed in euros.

Let us first of all note that the common currency lost 2.16% against the dollar in 2019, while the British pound gained almost 4% - which will not fail to reassure those who are worried about the British economy in the run-up to Brexit.

 

 

Fortunately, if you keep some of your savings in the form of physical gold, you were able to offset this loss, as the yellow metal appreciated again by more than 20% against the euro in 2019, starting the year at 1125 € and ending it at 1358 €. On January 6, the ounce briefly surpassed its September high.

 

 

What to expect for 2020?

Scorched by the surprise of 2019, forecasters have all converted to optimism for 2020, when their forecasts are not simply euphoric.

The latest bear markets are reduced to irony in equity markets that nothing seems to stop.

 

 

Knowing that the fundamentals have remained pretty much the same since Jerome Powell pitifully flip flopped on the subject of normalization in December 2018…

 

 

...the central question for 2020 is whether the markets will continue to have confidence in the stabilizing powers of Robert Kaplan (Dallas Fed Chairman) and his fellow players, or whether they will feel that the party has definitely gone on long enough.

 

 

This is a delicate way of conceding that central bank action has already contributed to creating some slight "excesses and imbalances" in the markets, isn't it?

In any case, for Ronald Stoeferle, the performance of an ounce of gold in 2019 confirmed the start of a new bull market and, on the yellow metal side,"the party has only just begun".

 

 

Whether you're in the "party" or not, I'll be sure to keep you informed!

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The information contained in this article is for information purposes only and does not constitute investment advice or a recommendation to buy or sell.

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