Investing Lessons from 2019

I told you a few weeks ago that you can ignore January forecasts. Your time is better spent looking back at 2019 to see what you can learn.

What did I learn? Much of what I saw last year reinforced long held beliefs. Such as:

  1. The cost of investing continues to fall. Trading is now virtually free and fund costs continue to drop. This is great news for investors everywhere. Pay attention to your investment costs (taxes, fund expenses, commissions, etc.). Overpaying really hurts your investment returns over time.
  2. Valuations give you an idea of future long-term returns, but they tell you nothing about what to expect next year. I went into 2019 saying exactly that. We expected returns over the next ten years to be lower than they were over the previous ten years. What happened in 2019? Stock markets around the world provided fabulous returns. That brings me to my next point…
  3. Stay fully invested. 2019 was a party in the stock market and the bond market. The only way you missed out is if you sat on the sidelines.
  4. Living off your portfolio income is no longer relevant. Companies often prefer share buybacks instead of dividends today. If you focus too much on dividends, you will miss out on some of the companies returning the most cash to shareholders. Take a total return approach to your cash needs instead. That’s a fancy way of saying sell some stocks when you need cash instead of trying to just live on dividends.

My education never stops. Yours shouldn’t either. You know where to reach me if you have questions.

Legal Disclaimer: These posts do not constitute an offer or recommendation to buy or sell any securities or instruments or to participate in any particular investment or trading strategy. They are for informational purposes only. CTW gathers its data from sources it considers reliable. However, CTW makes no express or implied warranties regarding the accuracy of this information or any opinions expressed by the author and may update or change them without prior notification.