December epitomized the volatility in the stock market that plagued us all of 2018. All sectors of the stock market fell over the month with energy stocks dropping the most. Health care and utilities stocks were the only sectors to close 2018 higher than they began. Cycles shift and no one market sector is always on top. Staying diversified keeps investments in the game. Periodic harvesting of growth, as we did when stocks peaked last summer, allows us to capture some gains and reduce future losses as cycles shift. As investors, it is important to understand that markets grow over time by these repeating cycles.
The Federal Reserve is planning further interest rate hikes for 2019, indicating that they read continuing strength in the economy. With the economy still strong, there is hope for a good recovery from 2018 market losses. So far stocks are still in a bull market. Stocks touched bear market territory in December but have not yet crossed the 20% drop from summer highs that will mark the end the current bull market. Stock markets anticipate shifts in the economy, so an end of the bull market will predict an economic slowdown.
A flock of mourning doves crowded the feeders for over an hour yesterday morning. They are usually scarce here in winter and may have been packing in fuel for a trip to a gentler locale. There is a lot of this going on now. Those who stay note the daylight. Potted orchids push out flower shoots for the climbing sun. The quiet season stirs in anticipation.