Fast forward to July 14th….. equity (stock) markets are up about 17 percent and most balanced portfolios around 8 to 10. Much different outcome than consensus expectations. And, quite simply, THAT is the lesson. People, or should I say the great unwashed masses, always get it wrong. Our mental wiring is off (its backward looking), and our greed/fear mechanism gets us in trouble. We read too much into ‘the news” and let social media into our psyche. Fighting the human wiring is a big part of what we (as advisors) do for our clients and a reason we rant often.
At his point we are by no means signaling the ‘all clear” sign, nor are we saying the investment and economic landscape are a bed of roses. They aren’t. Risks still exist and the potential for decline is clearly there. But…. and this is a big one…. they always are. In this man’s opinion the risks of commercial (and even residential) real estate decline are noteworthy. Same with the consumer debt load which is at an all-time high. All thoughts to keep in mind if one were to get too optimistic.
On the other (more positive side) is that inflation has slowed, and the money supply is being reduced. The excesses are being wrung out of the system. Interest rates have stabilized at a more reasonable long-term level and savers are being compensated. There is a chance that the Fed can meet its goals and not tank the economy with a hard landing. Maybe a more controlled series of rolling mini recessions. People are now more optimistic than a year ago. That’s why the market is now higher than it was a year ago. And, more importantly, you were there and reaped the returns.
Looking forward, we maintain our equity overweight position. Again, not crazy but enough that we have made nice returns the past year. At some point we will reduce exposure back to a neutral position (which we have started planning for). Again, not tomorrow but on the horizon. On the fixed income side, we are still short/intermediate duration which we plan on continuing. In many portfolios we have added individual treasury notes and done some tax related sale positioning. Basically, staying the course to what we have done for 2023 with a few tweaks.
As always, don’t hesitate to reach out on this or anything else you want to chat about. Being an investment nerd, I always enjoy the convo. If you want to set up a review, either in person or virtual, let us know that so we can get it on the calendar. Last, if you haven’t already told Tammy who your favorite football team(s) are, please do so. Thanks, and have a great rest of July.
Ed, Frank, Tammy
Edward Stiles
200 N Union St.
Kennett Square, PA 19348
cell 610-745-1931
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