Monthly Outlook: March 2023 Although markets started 2023 with strength and uptrends, February was a bit soft. The S&P500 lost 2.5%, the international EAFE index dropped 3.1%, and even Bonds gave back 2.6%. If you’re feeling like markets have been back and forth without any sustainable trends for a long time, you’d be right. The fact is that the S&P500, today, is exactly where it was two years ago. The bigger surprise is that Bonds are down 13% over the past two years, so investors with a blend of stocks and bonds are down, overall. The only asset that is up over the past two years is the Energy sector, which is up about 28%. But the Energy sector is only about 5% of the total market and no one puts all of their money in Oil company stocks. So, what gives? Where are the markets going and how should [...]

Monthly Outlook: January 2023 It’s that time of year when we wish each other “Health & Prosperity” or something similar. I’ve always thought that health (both physical and mental) should be one’s primary focus. Without it, no amount of money is really going to matter. But I have learned something about prosperity over the past several decades and will share some time-honored secrets to achieving it. After a dismal bear market in 2022, where nearly every asset class did poorly, many investors could use some hope and a reminder that there is a good path forward. First, a recap of 2022 for the record: S&P500 lost 18.2%, NASDAQ sunk 32.5%, International stocks dropped 15.5%, and even Bonds lost 13.1%. Cash was the only major asset class with a slight positive return. The typical diversified growth fund (i.e., Vanguard Growth Fund) lost 17.2% and many investors didn’t even do that well. [...]

Monthly Outlook: December 2022 The U.S. economy is not yet in a recession. But it is getting closer. In the meantime, markets have been zig-zagging lower as investors await clarity on the “Will We – Won’t We” question on recession. The market (S&P500) is down 13.2%, YTD, and we haven’t even started the recession, officially. Plus, investors have endured a lot of volatility along the way. The S&P500 has “zigged” four times (-12%, -17%, -12%, -16%) and “zagged” four times (+11%, +8%, +17%, +13%) to get to that -13.2%, YTD result. As we start December, markets are in a “zag” uptrend and trying to move higher. As more economic data is released and the Federal Reserve’s tightening program evolves, investors will become more certain about the outlook and more sustainable price trends will develop. But which direction? Our trend-following investment strategy (iFolios®) requires us to be invested on the right [...]

Monthly Outlook: November 2022  Markets had a decent “bear market rally” in October. The S&P500 gained 8.1%, the NASDAQ rebounded 4.0%, and international stocks added 5.9%. These are hopeful signs until you realize that all three markets are still down 17% to 29%, YTD. Much of the rally was sparked by speculation that the Federal Reserve might be ready to “pivot” on their rapid rate-hike program, and move to a slower pace and maybe even a holding pattern. The Fed has already raised Fed Funds from 0% in March to 3.00% today, and most likely to 3.75% this week. Markets anticipate another 0.75% or 0.50% at the Fed’s last 2022 meeting in mid-December, putting Fed Funds at 4.25% to 4.50% by year end. All of this is baked into the market today. The question is, What then? Will 4.50% be enough to quell inflation and signal “enough?” That’s the hope [...]

Monthly Outlook: October 2022  We’ve avoided a lot of the market decline this year by avoiding stocks. That sounds simple or obvious, perhaps, but it’s a big decision that most money managers won’t make. Our iFolios strategy is a trend-following strategy with rules-based signals that tell us when to buy for growth and when to sell for protection. Following our signals, we have been massively underweighted stocks for the past six months. As a result, we’re beating market benchmarks by 10% or more, YTD. As we sit in protection mode, our managed portfolios are moving sideways as the markets, and buy-and-hold portfolios, gyrate lower. Federal Reserve Chairman, Jay Powell, looked right into the camera after their most recent Board meeting on September 21st and told us that the Fed will use its tools to act as a brake on the economy and quell inflation. At least, that’s what we thought [...]

Monthly Outlook: September 2022  The two-month bear market rally came to an end in mid-August. It was nice while it lasted and gave the “buy & hold” crowd some hope. But the Federal Reserve Board (the Fed) poured cold water on the market by clarifying their commitment to fight inflation through tighter monetary policies. We’ll discuss the Fed and their plan later in this Outlook. But first, let’s review the markets. The U.S. stock market is down 16.2%, YTD, and the international stock market is down 19.8%, YTD. Bonds aren’t helping, either, with losses of 10.8%, YTD. Critically, nearly every market is below its 200-day moving average trendline, implying continued downtrends and the need for protection, for now. We’re doing that and our clients’ portfolios are beating the market benchmarks by a solid margin. The irony is that the economy remains strong, even if it is weakening a bit. But [...]