4Q 2018 Review: U.S. Equity ETF

4Q 2018 Review: U.S. Equity ETF
December 17, 2018

 David R. Kotok
Chairman and Chief Investment Officer
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The 2018 US stock market showed major changes in the fourth quarter. Volatility scared investors, and some panicked. Others changed asset allocations. Suddenly, 2% on cash equivalents had resonance. In the worst single week, the US stock market melted down $1 trillion in market value as it revisited the lows of the year.

Reasons: The Trump Trade War, Fed uncertainty, slowing growth, the Brexit mess, White House chaos and worsening POTUS legal problems, political changes in the House of Representatives, possible impeachment in 2019, oil market price collapse, Russian aggression in Crimea and Venezuela. I will stop.

We are using any pull back as an opportunity to add to our equity positions and expect a deeply oversold market to rebound early next year. We are overweight the healthcare sector using three different ETFs. We do not see a recession, and we do see S&P 500 earnings of $175 or so in 2019. For us that means a 2900-3000 range is fairly priced in an environment of low interest rates, low inflation, and slow growth. Of course, this could change at any time. 

We wish you a healthy and happy new year. It sure is a complex and challenging world.

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