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A Foolish Take: Nearly Everything's Winning in 2019

By Dan Caplinger - Jul 1, 2019 at 12:02PM

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A strong first half didn't just pull stocks higher.

The stock market has done extremely well so far in 2019, bouncing back from a big drop late last year that had many investors on the verge of panic. Despite fears about a global recession, trade tensions between the U.S. and key international partners, and a host of other potential concerns, stocks closed the first half of 2019 with their best performance in years.

This isn't the first time the stock market has recovered from difficult circumstances to produce impressive gains. Yet what's particularly interesting about 2019's first half is that it was hard to find a losing investment. The rising tide lifted nearly all financial markets, and that's a situation that rarely lasts long.

Many markets, one direction

Investors are paying a lot of attention to the gains that the S&P 500 (^GSPC -4.04%) put in to begin the year. Its 18% total return was its best since 1997, during the height of the tech boom. Even with a swift decline of nearly 20% late last year between mid-September and Christmas Eve, U.S. stocks have recovered to set record highs recently.

You can see below, though, that markets across the globe and among many different assets are seeing solid gains as well.

Chart showing returns of various asset classes

Data source: YCharts. Chart by author.

Gains in bonds aren't terribly surprising, given the recent declines in interest rates stemming from fears of an economic slowdown. However, the double-digit percentage returns that overseas markets have experienced -- in both developed and emerging markets -- are unusual for such an uncertain economic outlook. Oil's 25% jump is even more of a surprise considering the impact that sluggish economies around the world would have on demand for energy. Moreover, the 10% rise in gold prices has come largely from investor demand as a way to protect against a stock market decline.

It's not unprecedented for so many markets to move higher all at the same time, but it doesn't typically last very long. Eventually, the mixed messages that financial markets are sending will resolve into a unified theme. When that happens, investors need to be prepared for at least some of these benchmarks to reverse course and start giving up their recent gains.

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