Managing Peak Expectations

Monthly Outlook: July 2021 Confidence and exuberance are the watchwords of the day. And we’re as confident in the U.S. economy as everyone else. Thanks to science and vaccines, the COVID pandemic seems mostly behind us, and the economy feels as open as can be. Every restaurant and store seem crowded, and every airplane that I’ve been on is filled. Jobs are being created and the unemployment rate is steadily dropping. Stocks have fully recouped their COVID pandemic losses and added 25% more. House prices are spiking higher, up 14% over the past year, according to the Case-Shiller Index. Of course we’re all exuberant; happy days are here again, right? Yes, and no. It’s important to differentiate the mindset of Main Street vs. Wall Street, if you will. Main Street focuses mostly on the present, and on their own personal welfare. If individuals have a good job, good health, a [...]

By |July 1st, 2021|News, Outlook|

Will Inflation Pop the Stimulus Bubble?

Monthly Outlook: June 2021  Everything is opening up. Do you feel it? Vaccines have been widely distributed, COVID is on the way out, masks are coming off, graduations just happened, today is June 1st, and summer vacations are starting. And I can just hear a national exhalation, “Whew, we’re ready!” Meanwhile, on Wall Street, investors have been in party mode for a year already, enjoying massive stimulus and expectations of economic recovery. While Main Street is coming alive, Wall Street seems to be stalling. Why? Well, all that stimulus has created significant inflation and maybe too-optimistic earnings expectations. What if the Federal Reserve (Fed) is forced to taper their stimulus programs? What if Congress doesn’t pass any more COVID-relief stimulus plans? What if the economy has to recover from here by itself, on its own strength? That could have a major impact on investment prices and that is the reason [...]

By |June 1st, 2021|News, Outlook|

To Win the Derby, Pick the Fastest Horse

Monthly Outlook: May 2021  The Kentucky Derby is run on the first Saturday of May every year. It’s the most exciting two minutes in sports, some say. Picking the winner is difficult even for horse racing experts. The pre-race odds tell us who the favorite is, but it’s still a horse race. The favorite horse only wins 35% of the time. Investing is even harder, in some ways. Investing is like picking winners from a field of thousands of contestants that can go forward, backward, or sideways. But unlike horse racing, we can change our bets, change our investment selection and allocation, at any time during the race. And that, makes all the difference. To build lasting wealth, we must do more than just assemble a portfolio of fast running investments. We need to balance the goal of making it with the necessity of keeping it. What is wealth? It’s [...]

By |May 3rd, 2021|News, Outlook|

Don’t Be Fooled This April – Avoid These 3 Mistakes

Monthly Outlook: April 2021  It’s finally springtime in the Rockies and that means excitement for warmer and longer days, new growth, and transition from skis to bikes. Likewise, markets are volatile with transition from growth to value and rising interest rates to accompany the recovering economy. It’s only natural, then, that investors are coming out of their pandemic lock-down mode and wondering what the “new normal” will mean for them. Luckily, we have decades of history of economic and market cycles to learn from and have a pretty good idea what investors should do and not do. Below, we discuss three common mistakes that investors make at turning points. Chasing Performance For the past two years, Big Tech stocks like Facebook, Apple, and Google have led markets higher and vastly outperformed other sectors. Some astute, or maybe lucky, investors piled into technology stocks and had big returns in 2019 and [...]

By |April 1st, 2021|News, Outlook|

New Sell Signals Triggered – Nothing Good Happens in a Sell Signal

Monthly Outlook: March 2021  Stocks did well in the beginning of February but faded into the end of the month over concerns that interest rates and inflation are spiking higher. For the month, US stocks gained 2.7% and are up just 1.7%, YTD. International stocks gained 2.0% in February and are up 2.4%, YTD. But the market that has been so strong, the tech-heavy NASDAQ, lost 0.1% in February and is flat, YTD. There’s a clear rotation in the stock market from Large Growth (Tech) to Large Value (Financials & Energy). As we see so often, last year’s winners are unlikely to be this year’s winners. Bonds were the weak market in February, losing 1.6% as interest rates (10-year US Treasury) spiked to 1.5%. Remember, the 10-year US Treasury rate was only 0.5% last August. Investors seem to be increasingly concerned that the trillions of stimulus dollars coming from both [...]

By |March 1st, 2021|News, Outlook|

Remember One Year Ago, Pre-COVID

Monthly Outlook: February 2021  One year ago, the world was just becoming aware of the coronavirus, and we had no idea what the next year would entail. COVID came as a total surprise and a catalyst for a 30% stock market decline in March 2020. No one would have predicted that one year later, many parts of the economy would still be in restricted or “lock-down” mode, 10 million people would still be unemployed, that we’d be just beginning to roll out a vaccine, or that 450,000+ people in the U.S. had died. Further, no one would have predicted that given this economic and human disaster, the stock market would be up 11%. It doesn’t really make sense and that’s the point. As we look ahead to 2021, we really can’t know what we don’t know. And even if you did know, you couldn’t be sure what the markets would [...]

By |February 1st, 2021|News, Outlook|
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