2019 Year End Market Update

January 28, 2020

Dear Valued Customer,

Thank you for your continued loyalty to Trustco Bank. As we enter a new decade, we would like to take a moment to review some of the monumental economic and stock market events that have shaped the current market and economic environments in which we find ourselves.

For the first time in history, the U.S. economy started and ended the last decade without entering into a recession. In the past ten years, investors have endured only six instances when the S&P 500 Index fell at least 10% from a prior high. This is significant, as going back to 1928 the average occurrence of a correction of at least 10%, is more than once a year. The market over the past ten years recovered from each of those declines, as the 2010 -2019 period coincided with the longest bull market in history, which began in March 2009. A bull market is defined as stock prices rising, with major market benchmarks not experiencing a decline of at least 20% from a high. The S&P 500 Index, which tracks the largest 500 companies traded in the United States, returned an average of 13.54% annually, over the last ten years. This is above the 10% average annual gain since the inception of this Index in 1926. At inception, the Index was known as the ‘Composite Index’, consisting of 90 stocks. The Composite Index grew and began to track 500 stocks in 1957, when its name changed to the S&P 500 Index.

2019 began with heavy uncertainty and talks of a looming recession. The market countered with a performance solidifying 2019 as the 10th best year of all time, as the S&P 500 Index broke through the 3,000 threshold on July 12, returned 31.5% with dividends reinvested, and hit record closes of 3,240.02 on December 27, 2019 and 3,329.62 on January 17, 2020. Prior to the financial crisis, the Dow Jones Industrial Average set a record high in October 2007 of 14,165. The Index broke through its 20,000 level in January of 2017, and surpassed its 28,000 level on November 15, 2019. Since breaking 28,000, the Index has seen multiple closing highs, culminating to a closing price of 29,348.10 on January 17, 2020, bringing the Dow Jones to less than 5% off of its next anticipated threshold of 30,000.

Key economic indicators gained momentum as 2019 unfolded. The year began with the Federal Open Market Committee (FOMC), who is responsible to set a target Federal Funds rate eight times a year based on prevailing economic conditions, indicating they would continue to raise interest rates, after four rate increases of a 25 basis point range in 2018. Ultimately the FOMC decided to cut the overnight interest rate on July 31, which was followed by two more rate cuts, bringing the overnight rate back to a 1.50 – 1.75% range. The Fed has indicated they anticipate no change in interest rates in 2020, due to the current strength of the economy. Consumer confidence rose higher in 2019, due to a stronger than anticipated labor market. Job gains averaged 176,000 per month, led by health care and leisure & hospitality services. The unemployment rate remained at a record low 3.5%, signifying full employment in our economy. Gross Domestic Product (GDP), the total monetary or market value of all the finished goods and services produced within a country’s borders in a specific time period, had its strongest first quarter reading of 3.1%, since 2015. The United States has seen over $1 trillion dollars repatriated from our domestic corporation’s overseas profits since the December 2017 Tax Cuts and Jobs Act. A large percentage of the funds brought back thus far have been used in share buybacks and dividend payouts to shareholders. Both strategies have had a positive impact on the stock market.

The last decade has seen several highs and lows in the stock market, and our domestic economy has continued to strengthen despite geopolitical and international events. The key take away from the last ten years that we would like to convey, is even amid market volatility, it is important to stay the course and not make any changes to your long-term investment strategy, absent any changes to your risk tolerance, cash needs or time horizon, which may cause a change to your Investment Objective in good or poor market conditions.

Trustco Bank’s Financial Services Department will customize a unique portfolio tailored to meet your needs, taking into consideration your financial goals, risk tolerance and time horizon. Our Department’s investment philosophy of designing portfolios for long term growth and income is accomplished through implementing diversification within each portfolio, and investing in high quality equities and fixed income securities. Trustco Bank is committed to a consistently high quality client experience, serving you with expert advisors while keeping your portfolio on track as you continue toward your financial goals. We welcome the opportunity to meet with you and help you reach your financial goals.

View our Department’s Investment Performance results as of December 31, 2019. Please call us if you would like to learn more about the Financial Services Department, and how we can help you achieve your financial goals in the new decade.

Sincerely,

Patrick J. LaPorta - Administrative Vice President

Lauren A. Maxwell, CTFA - Investment Officer

Investment Products - Not FDIC Insured. Not a deposit. Not insured by any Federal Government Agency. Not guaranteed by the bank. May go down in value.

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Investment Products - Not FDIC Insured. Not a deposit. Not insured by any Federal Government Agency. Not guaranteed by the bank. May go down in value.