Fourth quarter gains punctuated a big year for stocks and a remarkable decade in capital markets. Accommodative monetary policy, “good enough” corporate earnings and enthusiasm for big technology stocks drove gains in 2019.

Two primary drivers of returns over the last decade were timing, as the global economy was fresh out of a recessionary low point, and central bank policies. US stocks dominated other asset classes. Long and powerful leadership cycles such as this are historically common, but they do eventually come to an end.

We believe investors should continue to expect positive returns over time, while understanding that what worked in the last ten years may be different than what works in the next ten. The path for the coming decade will likely be bumpier and the rewards more moderate.

We don’t see any compelling reason for the US economy to stop expanding in 2020. The Fed appears determined to keep its foot on the gas. Still, ten years into a bull market is generally not the time to be greedy. We urge investors to stick to a plan and not get diverted by fear or tempted to chase what’s hot.

With a monumental election year ahead of us in 2020, some investors are wary about how the market will react to a potential change in political power, and to the uncertainty leading up to the election. But one lesson from the last decade is that election results are hard to predict, and market reaction is even harder. With that in mind, we believe investors are generally better off not making significant allocation decisions based on politics.

In terms of sector weighting, Apple and Microsoft together make up about 7.5% of the total US Stock market, roughly the same size as the Russell 2000. Historically, small cap stocks have outperformed the broader market while the very biggest stocks tend to lag. It is important to manage exposure to both segments.

Read the full fourth quarter commentary here.