In stark contrast to the beginning of 2019, global stocks closed out January with a 1.1% loss versus a gain of 7.9% in the same period last year. US stocks recorded their first month-over-month drop in recent months as investors were left with uncertainties surrounding the outcome of the Trump impeachment proceedings, tensions with Iran, and the Coronavirus (COVID 19) outbreak. The US Federal Open Market Committee met and left its interest rates and policy unchanged. The earnings outlook remained favorable. Gold rallied almost 4% to close at $1,593. The Bloomberg Commodity Index dropped over 7% with crude oil prices plunging over 15%. Bond prices climbed as the Ten-year US Treasury closed sharply lower at 1.51%, down from last month’s 1.92%
There’s always something to rattle the markets. Wise investors understand that, and don’t let the news derail their investment strategy. But when bond yields sink, even disciplined investors may be tempted to jump to dividend-paying stocks as an alternative for generating cash. This month we look at the pros and cons of that approach. (Hint: there is no free lunch.) First, a look at January’s market performance.