This month, the CFA Society Portland held its 13th Annual Investment Strategy Dinner. Vista’s Chief Investment Officer, Dougal Williams, was one of three local investment experts to participate in a panel discussion on strategies for today’s market environment.

Below are edited excerpts from Dougal’s responses to the moderator’s questions.

Q: What was the market’s biggest surprise in 2018?

Three things come to mind.

First, I was surprised by General Electric’s continued fall from grace. The stock was down 60% in 2018. When I first entered this profession, GE was the biggest company in the world and had outperformed the S&P 500 by nearly 20% per year for 5+ years. It had increased its quarterly dividend for 30 some years in a row. No blue chip was bluer. But since that time, the stock is down over 90%. I think there’s a lesson there for investors enamored of today’s market darlings.

Second, I was not surprised to see Bitcoin down 80% in 2018. While we’re not in the prediction business at Vista, we did warn folks about Bitcoin.

Finally, I was pleasantly surprised emerging market stocks held up as well as they did in the fourth quarter. While the S&P 500 was down almost 20%, emerging market stocks were down only 5% or 6% in the final three months of the year. When we’ve looked at the worst periods for U.S. stocks, historically emerging markets are down as much or more. So, for them to provide that relative cushion late in 2018 was a benefit.

Q: On December 24, the S&P 500 nearly entered bear market territory when it closed 19.8% lower than its September 20 peak. Is this a harbinger of a pending recession?

Not necessarily. Since 1929, there have been 21 bear markets—and nine of them didn’t lead to a recession. There have also been six recessions not associated with a bear market.

If you’re making investment decisions based on economic cycles, you might think you’d want to get invested when the recession ends. The reality is, by the time the recession ends, stocks have already gone up—by about 30% historically.

Of course, these economic cycles are only clear with the benefit of hindsight. Since the NBER started formally announcing turning points in the business cycle, it’s taken about 15 months for a peak or trough in economic activity to be announced.

The average return during the 15 months from the low point in the stock market until the NBER announced the recession has been 66%. To me, that’s the cost of waiting for certainty and just one more reason the most prudent investment advice today is to buckle up, not bail out.

Q: Given current trends, what’s your best advice for investors regarding asset allocation?

Stay patient and disciplined.

With asset allocation, there’s always part of your portfolio you’re going to despise. Today, that may be small cap or value or international.

But despite the attractive returns U.S. large caps have enjoyed of late, let’s not forget we’re less than a decade removed from a 10-year stretch in which $1 in the S&P 500 turned into 91 cents. In that same period, small value stocks more than doubled and emerging small cap stocks nearly tripled.

Just as it would have been unwise to give up on U.S. large cap stocks then, it’s probably wise to not give up on these other parts of a well-diversified portfolio.