Newsletters Wayne's Wisdom
January 30, 2019

2018 Annual Market Review

There are many winding roads in front of us as we embark on the trail of 2019. I would implore you to consider being different this year. Dare to take the path less travelled, to not listen to the financial press or the talking heads in the square box. Stay with your financial plan, don’t panic, and realize this is the path taken by astute investors. The road less travelled is not the one chosen by most investors, as most investors are at the whim of mass communication and market prognosticators. Downside protection is not such a bad idea when you see the fallout of the 4th quarter of 2018 (see market commentary below). Our strategy of wealth preservation proved to be fortuitous as the global markets rolled over in the last quarter.

We are not in the business of predicting the next move of the Fed or President Trump. It would be a trap to take that path over and over. Wise investors filter the noise that calls us to make grave mistakes. In 2019, let’s take the road less travelled by staying the course with a thoughtfully-designed financial plan.

In Robert Frost’s most famous American poem, the speaker analyzes his decision. He chooses the road of nonconformity. He travels alone. The road he takes clearly has less distractions, and, he reflects, “that has made all the difference.”

The Road Not Taken by Robert Frost

Two roads diverged in a yellow wood,

And sorry I could not travel both

And be one traveler, long I stood

And looked down one as far as I could

To where it bent in the undergrowth;

Then took the other, as just as fair,

And having perhaps the better claim,

Because it was grassy and wanted wear;

Though as for that the passing there

Had worn them really about the same,

And both that morning equally lay

In leaves no step had trodden black.

Oh, I kept the first for another day!

Yet knowing how way leads on to way,

I doubted if I should ever come back.

I shall be telling this with a sigh

Somewhere ages and ages hence:

Two roads diverged in a wood, and I—

I took the one less traveled by,

And that has made all the difference.

I enjoyed this synopsis below from one of our astute asset managers, Nixon Capital.

Nixon Capital Newsletter

“Another quick way to sum up the 2018 investment story would be one word: December. The S&P 500 declined by 9.03% in December, the worst return for that month since 1931. The December sell-off also capped off the worst quarterly return for the S&P index since 2008, at -13.5%. The trailing P/E multiple on the S&P 500 contracted by 19% in the fourth quarter, the 14th biggest decline in the last 92 years, according to Empirical Research Partners. They also note that in 15 of 20 historical contraction episodes of this magnitude, the market’s multiple recovered the following year.

Pundits may say China tariff issues caused market weakness or that the inversion of the U.S. yield curve added pressure, but in historical context the modest market correction of 2018 is par for the course nine years into a cycle. It might even be healthy. We don’t say this to be dismissive of investment declines – we…emphatically wish to make money every calendar year - but we know from history that long-term compounding includes down periods…When market declines come, as they did in December, more companies tend to move closer to our buy zone. Consequently, rather than obsessing over market moves, we view price changes as an opportunity to upgrade our investment holdings.”

We keep a close eye on all markets and have attached our comprehensive quarterly report and annual review here for you.

Have a prosperous and peaceful 2019 and do not hesitate to call, email or stop by with any questions.

“We have done better by avoiding dragons than slaying them”- Warren Buffett

Most Sincerely,


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