2019 in Review

This financial article from December 2018 ranks as my favorite. Somehow gracing the NY Times Styles section, of all things, makes it so much better. I never considered that investing should be threaded into a discussion of Louis Vitton or Christian Dior. I love the directive confidence of the title. As if it was pre-ordained that the market was going to fall, and the only thing left to do to tidy up 2018 was to acquire a helmet and a prayer book.

The crash didn't happen. Instead, the markets had one of their best years in decades. The S&P 500's 33% and U.S. real estate's 30% returns were impressive, but arguably more impressive was the breadth of asset class returns. In a complete reversal from 2018, every major equity class index we use was up over 20%, and most Treasury indexes were up from 6% to 16%.

Blowing through crash mongering early in the year, and then the hand-wringing over an impending recession, the market climbed quickly in January 2019, and steadily for almost every other month of the year, with two periods in the summer being the exception.


Those of you who have met me, or any One Day In July advisor, know that our true interest lies in cash flows. And this is where 2019 scored an impressive metric. The rate of dividend increase on every equity index we commonly use beat the long-term S&P 500 average of 6%. International small cap dividends were up a whopping 36.3% in a year, emerging markets surged 31.1%, and U.S. small capitalization companies rose 25.7% on their dividend payout.

This matters. To be a good investor, you need inbound cash flow, and the indexes delivered in spades in 2019. To be a great investor, you need the iron stomach to buy indexes that are going down, out of favor with other investors. In this regard 2019 did not afford us as many opportunities.

While the cash flow increases were impressive, keep in mind that the overall dividend payout rate (not the increase, the current rate), is not impressive by historical standards. Businesses were catching up. Real estate yields just over 3% today. At the nadir of the financial crisis that number was closer to 16%.

Additionally, S&P 500 profits barely budged in 2019, and after inflation they were down. So the 2019 return is entirely speculative - investors are betting that businesses will do better in the future than previously expected.

One final note. When recession talk swirled over the summer, our risk protection strategy kicked into high gear for clients. The long-term Treasury index, at one point in August, had surged 24% in 8 months, and this in a year that opened with interest rates at 2.5%.

Don't underestimate the importance of this. Many of you noticed that something was offsetting the gloom and doom. This was an instructive financial anecdote leaving fingerprints.

An anecdote not good enough for the Styles section, but not bad.

Dan Cunningham

Sources: S&P long term dividends: NYU Stern Prof Adamodar. Dividend rates vanguard.com and nasdaq.com for Vanguard respective index funds. All returns total returns. S&P 500 profit numbers from FactSet Earnings Insight 12/13/19.

Return to Articles
How We Are Different
Low-fee index funds. Transparent & fiduciary financial advisors.
Local Financial Advisor
We are in your community. We are local.
Investment Management
We tailor to each client. Index funds at the core.
Index Funds
Broad market exposure, low expense.
Dan's Corner
Meaningful musings from our founder.
Fiduciary
Your best interests are our priority.
Low Fees
Our fees are among the lowest in the nation.
Financial Planner
Financial advisor optimizes your financial picture.
U.S. Treasury Bonds
Use Treasury Bonds to reduce risk.
Book Recommendations
Here are some of our favorites
Who We Serve
We work with clients nationwide from all financial backgrounds.
When Should I Invest?
Life transitions = important financial decisions.
Retirement: 401k and More
Retiring? Plan the future you want.
IRA Rollovers
401k Rollovers. IRA Rollovers
Active vs. Passive Investing
We believe there is a winner in this debate.
The Investment Process
How we work: low-cost index funds, personalized attention.
Simplicity
Simplicity is the ultimate sophistication.
Investing: What to Focus On
Low-fee index funds. fee-only advisor.
Switching Financial Advisors
Can be uncomfortable, but an important step.
Advisor Recruiting
We attract top-tier talent. Not your usual firm.
Basic Investing
Let's start with Investing 101.
Understanding Your Financial Statement
Let's break it down to basics.
Taxes on Investments
What causes taxes within your investments?
Behavioral Finance
Nudge vs. Sludge.
Timing the Market in 2020
2020 - a case study in the futility of market timing.
How Financial Firms Bill
Fee-based vs. fee-only, and lots more.
Who Supports Indexing?
Bogle, Swensen, Buffett, and others.
Transparency
One click to see our fees.
Mutual Funds vs ETFs
Clarifying the difference.
Does Stock Picking Work?
The research says no.
Countering Arguments Against Index Funds
What happens in a down market?
Annuities
Lots of fees, little clarity.
How Do Mutual Funds Work?
Invest in the basket.
How to Relieve Financial Stress
New client? anxiety is normal.
Financial Terms Glossary
Common investment terms you should know.
Firm Comparison
One Day In July vs the competition.
Retired Investing
Retiring? Let us help.
Accounts We Manage
We manage a wide range of investment account types.
High Net Worth Investors
Preserve and grow your wealth.
Investing an Inheritance
Prioritizing and planning for the future.
Frequently Asked Questions
Good questions, real answers.
Female Investors
Your voice needs to be heard. We are listening.
For the Business Owner
Choosing what's best for your business.
Environmental Investing
Carbon intensity, fossil fuels.

Locations

Vermont

Connecticut

United States

Services

Individuals

401k Plans

Institutions

Environmental

Account Types

Differentiators

Cash Flows

Low Fees

Fiduciary

Dedicated Advisor

Materials

Advisors: Join Us

Careers

Articles on Investing

About the Secure Act

Quarterly Booklets

Resources

Vermont Investment Management

Vermont Retirement Planning

Vermont Wealth Management

Vermont Financial Advisors

Investment Tools

In the Media

Shelburne, VT Financial Advisor

Frank Koster | Josh Kruk | Keith McCarthy

5247 Shelburne Rd, Suite #101

Shelburne, VT 05482

(802) 777-9768

Stowe, VT Finanical Advisor

Available for meetings in Stowe.

Peter Egolf

(802) 999-2321

Burlington, VT Financial Advisor

Hans Smith | Katie Muttitt

Nancy Westbrook | Peter Egolf

77 College Street #3A

Burlington, VT 05401

(802) 503-8280

Darien, CT Financial Advisor

Available for meetings in Darien.

Keith McCarthy

(203) 554-9466


v 1.7.44 | © One Day In July LLC. All Rights Reserved.