GrowtoRetire 2019 Investment Outlook

GrowtoRetire 2019 Investment Outlook

First of all, I want to wish all my readers a happy 2019. May all your dreams come true.

This post is meant to be an outlook for the new year. Other outlooks that I’ve done can be consulted here. As on other occasions, I will focus on
Stocks, Bonds, Oil, Gold, and Real Estate. I will also evaluate what I wrote in the past in order to see if my past outlooks had some success.

Stock Market Outlook

The last 3 months of 2018 were very bad for the stock market, with the SPY (SPDR S&P 500 Index) falling around 20%. Thus and by all measures this was a bear market. But as I wrote other in other outlooks, crash was mitigated by a strong recovery in the beginning of this year.

2018 was also marked by a strong volatility (SPY with 17%) that reflects the uncertainty of the current political, financial and economical world landscape.

Trade wars such as the ones created by the US/China, the economic slowdown of countries such as Germany or again China, and the lack of governments reforms that incentivize investments and more efficient allocation of capital will continue to contribute to the volatility and uncertainty.

Central Banks

I won’t participate in the world hysteria that Central Banks are the culprit of present and future bear markets or some worldwide economic recession. I honestly think that they did all that was possible with the information that they had. We can only point out that increasing interest rates too fast without a clear indication of inflation and economic strength could, in fact, contribute to a market meltdown.

I blame the lack of government reforms. What exactly is being done – worldwide – to incentivize the average joe like me and you – to invest more in stocks, companies and creating jobs? Here in the European Union? Almost nothing. Dividing tax money through funds for companies that are experts on attracting government/federal funds is not incentivizing.

That’s only parasitism. Nothing more.

Stop spending money like this and start giving tax incentives to everyone that is willing to take more risk in investing, creating and innovating. Stop blaming the Central Banks. And stop giving away special tax incentives and money only to the ones already rich enough to be heard.


The inflation in the US was 1.9% in 2018. I can’t see a clear reason to increase the interest rates now. Of course, the economic data is also to be taken into consideration. Therefore I’m curious to see what the federal reserve will do in 2019.

A strong increase will probably contribute to more volatility in the stock market.

Bond Market Outlook

In 2018 the AGG had a +0.1% return and a 3.5% volatility. Again this type of bonds, high quality, and liquid, serve as a factor of stability for the overall portfolio.  It had very inferior volatility when compared with the SPY.

It did its job. Especially when you consider the increasing rates environment in the US.

Going forward I expect that if the federal reserve keeps on increasing the interest rates, the bond will have poor returns, but will compensate with a much lower volatility. Thus it can be a golden opportunity to slowly and quietly increase the allocation of capital, so that years later one can enjoy the lower interest rates that central banks use to compensate some bear market + recession/depression of the economy.

What didn’t surprised me was Emerging Markets Bonds. WisdomTree Emerging Markets Local Debt (4-5yr) – ELD – finished the year with a return of -7.5% and a volatility of 9.3%. Therefore, I still maintain the outlook that a global increase in rates (US/EURO/CHF) will trigger an outflow from emerging markets bonds. Unless these countries compensate with more return for their debt (only possible for those with healthy public financial situations).

With no inflation showing up, the United States 10-Year Bond Yield keep its value practically stable below 3%. I believe that it will continue like this for the immediate future.

Real Estate Market Outlook

The VNQ had a bad year. A negative return of -6.0% with a 16% volatility. Thus a worst return when compared with the SPY with more volatility.

Real estate was really disappointing, because it has a rough start in 2018 (it felt when the SPY was doing good), and then it recovered. Later in the year it felt just as the rest of the market. Hence the bad year.

What history tell us (last 10 years) is that if you invested 100% in US REIT, you would have a similar return when compared with the S&P 500 Index. (242.3% VNQ vs 242.2% SPY). Total Return (including all dividends) from Jan 05, 2009 – Jan 11, 2019.
The problem was volatility: 26.8% VNQ vs 16.5% SPY.

If interest rates increase, that will eventually reflect on mortgage rates. Consequently it will be more difficult to do business in the REIT sector (money more expensive -> less money to invest in the real estate).
On the other hand, more volatility it’s not necessarily bad. It means you’ll have more opportunities to buy a particular asset.

And if (or when) the interest rates decrease to accommodate other recessions, it’s possible to enjoy higher returns. Meanwhile I believe that with high (or higher) interest rates, volatility and lower returns will be the immediate future of REIT.


Oil: That’s the most surprising thing that happens in 2018. Crude increased until October when it hit approximately 75$. From that moment on, it went straight down like a stone in water. All the way until it hit 42$ at the end of December. Harsh. The future is too bleak. One thing I’m confident: you’ll have more volatility in 2019.

Gold: When everything was falling, (last trimester) gold was shining. If it wasn’t for the first 9 months, gold would probably have a good year.
It had a negative return of -1.9% and a volatility of 9.8% (GLD – SPDR Gold Shares).


As you probably know from reading the blog, I’m a strong supporter of a simple, diversified, cheap and easy portfolio of stocks and bonds. Thus I use ETFs. Years such as 2018, are actually good to invest because you have an opportunity to buy low.

My plan going forward is quite simple: In good years invest in a particular date, end of the year. Dollar-cost averaging. If the market is crashing I have particular points to enter. Buy stocks when they hit -20%, and then more if they go -40%, and so on. Never go all-in. Don’t obsess. Be flexible. Always have an emergency fund for, you know, life.

I’m skeptical when it comes to commodities. I don’t invest in any of them. Of course, if you had invested in Palladium (PALL) you will be sitting on a +17% return in 2018. I don’t like the volatility. Also, I prefer assets such as companies that actually “work” and deliver a dividend, coupon or interest. A rock will always be a rock. A company is an organization that is working towards an objective: profit.

Let’s hope that the US Federal Reserve learned from the recession of 1979-1982, and doesn’t hit the economy with unnecessary interest-rate hikes. Additionally, it would be really good if governments increased the number of reforms, enjoying the positive growth and relatively low unemployment, especially among developed countries. Some ideas: Reduce debt, and encouraging (fiscally and legally) individuals to create more companies and products.

2019 Investment Outlook Pinterest GrowtoRetire
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Read more:
Are Market Moves Happening Faster? (A wealth of common sense)

And you reader, do you agree with these observations? What’s your opinion?

About GTRetire

GTRetire is the founder of GrowtoRetire, a blog about financial independence and early retirement. Click here to learn more about starting a blog! Also, this post may contain affiliate links, please read the disclaimer for more info.

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