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4th QUARTER EQUITIES

Equity Market: The market was strong in the first half of the year as the Federal Reserve announced its change in policy direction. The third quarter was flat as concerns about the U.S./China trade conflict and possible recession worried investors. Those worries faded, however, as the Trump Administration announced a “first phase” trade agreement with the Chinese. The Federal Reserve also said it would maintain accommodative monetary policies. The market rallied in October and kept climbing until year-end. Volatility was low. It was one of the best fourth quarters in more than a decade.   

The Dow Jones Industrial Average was up 4.75% for the quarter and 21.74 % for the full year.  The S&P 500 gained 8.53% in the quarter and 28.88% for the year. The Nasdaq Composite index was up 12.17% in the quarter and 35.23% for the year. The Russell 2000 index was ahead 9.52% for the quarter and 23.72% for the year.   

Preferred Equities: We remain focused on large cap companies with strong balance sheets, sustainable cash flows, and credible business models. Companies that pay attractive dividends are central to our strategy. The sectors getting our interest are similar to last quarter.  
HEALTH CARE: The larger uncertainties regarding national health care policy make us cautious about much of this sector. But we like select names in bio-technology and medical devices.  
TECHNOLOGY: We are also cautious about this sector – given the huge run-up during 2019 in the big tech names. But areas such as communications equipment and semi- conductors have our interest. 
FINANCIALS: Both large banks and regional banks did well in 2019. We think further opportunity exists in 2020. The strong consumer confidence is good for banks that serve individual customers. 
INTERNATIONAL: Equity markets in Europe and emerging market countries look to be much improved in 2020. For many clients, we will recommend more international exposure through mutual funds. 
 

Other Equity Approaches: We are interested in Exchange Traded Funds as a part of client portfolios. These vehicles allow us to manage volatility but still provide exposure to value or growth stocks. For some clients, we also partner with firms to co-invest in private equity strategies.


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