Hi,

2018 was a “nowhere to hide” kind of year

Through its wild swings both up and down, 2018 proved to be a “nowhere to hide” kind of year.  It was also the first year in a long time that both stocks AND bonds went down.  This rarely happens.  Matter of fact, this was the first time in 50 years that stocks and long-term US Treasuries fell together!  (source:  Federal Reserve Bank of St. Louis).

Out of the 70 Morningstar main fund categories, only five were positive for the year.

This shows just how widespread the damage was in 2018.  Those five categories were:

1. Utilities +2.76%
2. High Yield Munis +2.11%
3. Short-Term Bonds +0.92%
4. Intermediate-Term Gov Bonds +0.51%
5. Muni National Long-Term +.27%

That’s it. 

On the other side of last year’s performance by category, here are the worst five:

1. Equity Energy -27.27%
2. China Region -20.68%
3. Foreign Small/Mid Blend -19.13%
4. Foreign Small/Mid Value -19.13%
5. Natural Resources Stocks -19.01%

Collapsing oil was no friend to energy stocks, just as an economic slowdown in China pushed their stock market to tank.

Relatively speaking, the US was the best place to be for equity markets (US Large Blend Category -6.27%).  Foreign stocks (Foreign Large Blend Category -14.59%) and Emerging Markets (Diversified Emerging Markets Category -16.07%) really took a beating.

Going forward, we have no crystal ball for future predictions in asset classes.  However, we do believe it is very likely that elevated volatility will continue for the foreseeable future, so just as in 2018, tactical strategies continue to make good sense for risk-managed asset allocations.

Optimus Advisory Group manages liquid tactical and alternative investment strategies that meet the needs of our clients.  We use a disciplined, quantitative methodology to build and manage our portfolios.

Over a full market cycle, these strategies are designed to provide superior risk-adjusted returns while maintaining a low-correlation to traditional market indices.