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Monthly Outlook: August 2023 Markets continue to trend higher, and portfolios are growing. For all the nervous talk about interest rates, recession, inflation, and other risks, the markets just don’t seem to listen or care. The Magnificent Seven big technology companies certainly sparked the initial excitement earlier this year, but the optimism has spread to other markets and now almost every market and sector is moving higher. This summer, the trend is our friend and we’re fully invested to capture the available growth. It’s a good time to remember that the market is not the economy. And we invest in the market, which can, and often does, act in counterintuitive ways to the fundamentals and economic data. Yes, the Fed has raised interest rates from 0% to 5.25% over the past year and that should slow the economy. Yes, inflation is still too high at 4% to 5%, depending on [...]

Monthly Outlook: July 2023 Some of our readers will remember a great American Western movie from the 1960s called The Magnificent Seven. It had a great cast with Steve McQueen, Yul Brynner, Charles Bronson, and others as tough guys that were hired to save the town. Today, there’s a new Magnificent Seven in town and they’re here to save the stock market. Apple, Microsoft, Amazon, Nvidia, Google, Tesla, and Meta (Facebook). These seven stocks have rallied for the past six months as investors are in love with anything “AI” or involved with artificial intelligence. AI is the new “dot com” and investors will pay any price to be a part of it. Maybe we should change our investment strategy name from i-Folios to AI-Folios! 7 vs 493 The Magnificent Seven stocks have provided nearly all of the returns of the S&P500 this year. This contribution is due to two factors: [...]

Monthly Outlook: June 2023 The current news for investors centers around rising interest rates, raising the debt ceiling, bailing out failing banks, the possibility of a recession, narrow breadth where big gains from 10 Big Tech stocks are propping up the whole S&P500, and so much more! No wonder Consumer Sentiment readings are soft. We could go deep into the weeds on all of this, but this month I’d rather step back and focus on the bigger picture. I believe there are four steps to being a better investor that might add more value to you than the current news. The four steps are Goals, Markets, Strategy, and Evaluation. But please don’t stop reading here, continue to learn why. Goals, What Do You Really Want? I think all investors would be well served to deeply think about their goals and to clearly articulate to their advisors what they really want. [...]

Monthly Outlook: May 2023 Markets continue to trend higher in April, although they faded a bit at month end. After a rough 2022, where the S&P500 lost 18.2%, the recovery of the past several months has been a welcomed reprieve. The S&P500 is “only” about 13% off its recent January 2022 peak and, more importantly, the trend is up, for now. Bonds, too, are trending higher this year after losing 13.1% in 2022. Interest rates, at least in the 2-year to 30-year range, have likely peaked for this cycle. Remember, lower rates mean higher bond prices. That said, the Fed may raise their 1-day Fed Funds rate a bit higher still and will probably keep them there for months until they trigger an economic recession. But again, that’s good for bond returns. Although most markets are trending higher again, which suggests that investors are optimistic, the economic reports are increasingly [...]

Monthly Outlook: April 2023 March was another volatile month for markets but ended up with gains across most markets. The first week of March brought news of a bank run focused on Silicon Valley Bank, Signature Bank, Credit Suisse, and other smaller names. But by March 13th, bailouts and stimulus programs came to the rescue and markets rallied for the back half of the month. Markets just love “cheap and easy” money, and our government doesn’t disappoint. Between the FDIC, Federal Reserve, Congress, or Executive orders, every “crisis” is met with a stimulus program. We could debate whether it’s the government’s job to prop up markets (we won’t), but that’s the Pavlovian response that traders have learned. For the first quarter of 2023, the S&P500 is up 7.4%, the international stock market is up 8.9%, and bonds are up 3.2%. Despite all the stressful news and worry, markets are holding [...]

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 [...]