Market Data Bank

4Q 2018

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The Standard & Poor’s 500 stock index posted a -13.5% loss in 4Q 2018, following a huge +7.7% total return in 3Q2018, a +3.4% return in 2Q, and a -0.8% loss in 1Q 2018. It was the worst quarterly performance for stocks since 2011. Riskier small-caps, meanwhile, lost about 20% of their value in the quarter.



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The plunge followed a spectacular bull run: nine consecutive calendar years of positive returns and a +10.8% return through the first 11 months of 2018. On December 19th, the Fed hiked interest rates a quarter-point, and 2018 ended amid heightened fear the Fed would keep raising rates and cause a recession.


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Though the S&P 500 lost 4.4% in 2018, health care stocks gained 6.5%. The biggest losers were companies related to natural-resources, as slowdown fears caused share values in economically sensitive sectors to suffer the worst damage among industry sectors.


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Atop this list of 13 asset classes sit U.S. stocks, which outperformed every other asset class in the five years through 2018. The S&P 500 index’s total return of +50% was more than six times the S&P Global ex-U.S. stock market’s return of +8%. U.S. financial economic measures were strong versus other liquid asset classes.


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At 116-months old, this expansion, following on the 2008 Global Financial Crisis, is highly likely to exceed the longest boom in post-War history, the 120-month long stretch in the 1990s. Unless a black swan event were to occur, strong fundamentals could make this the longest expansion in modern history.


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In the 21 years and 11 months through November 30th, 2018, the risk-free 90-day U.S Treasury Bill averaged an annual return of 2.1%, compared to a 7.2% annualized return on the S&P 500 stock index. This period encompassed two financial economic cycles illustrating the current equity risk premium.




Past performance is never a guarantee of your future results. Indices and ETFs representing asset classes are unmanaged and not recommendations. Foreign investing involves currency and political risk and political instability. Bonds offer a fixed rate of return while stocks fluctuate. Investing in emerging markets involves greater risk than investing in more liquid markets with a longer history.








Howard Materetsky, Ira S. Materetsky CFP®, Matt Welsh and Mark Furman offer advisory products and services through Materetsky Financial Group, a registered investment advisor. Securities offered through Private Client Services, Member FINRA/SIPC. Materetsky Financial Group is not affiliated with Private Client Services. Tom Gau offers advisory products and services through Materetsky Financial Group, a registered investment advisor.

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