Our investment strategy for 2019 has been to be defensive, yet optimistic. We thought stock prices might fall in the midst of a global slowdown, but there was the possibility of resolution in trade talks and positive earnings. To balance this risk and reward outlook, we diversified our portfolios further by adding more growth stocks and emerging markets.
What Are Growth Stocks?
Growth stocks are shares in a company that grows at a higher rate than the average for the market. Recently we moved money away from value stocks, those that trade at a lower value to their fundamentals (a.k.a. data that can impact the value of a stock), and moved it to growth stocks, which trade at a higher value.
What Are Emerging Markets?
Emerging markets are countries trying to grow their economy to become a developed nation. When we think of developed countries, we may think of Canada, The UK, and Japan. However, China, Malaysia, Brazil, and India are types of emerging markets, but they’re not all equal investment opportunities.
You Can’t Get Rid of Risk, But You Can Limit It
Investing in different equity types can reduce risk over time. One of the limits to performance is the tendency to invest with a hometown bias, that is to only invest in only what you know, like in the company you work for or in the country you live in. Home bias is a risk that can be avoided by owning different stocks in different industries and in other countries.
We have learned that over time having a diverse asset allocation also helps investors reduce risk. As long as the global economic conditions putter along in the slow lane, we’ll emphasize growth stocks over value stocks and we’ll stay diversified with a mix of stocks and bonds while holding a cash reserve for opportunities.
How We Help You Succeed
A comprehensive financial review is an important resource to help you to reach your goals. Come in and we’ll review the components of our services with you. Each of you has a unique financial plan which revolves around an investment strategy, cash flow, tax planning, retirement needs analysis and possibly your estate plan. We’ll answer your questions and address any concerns.