Quick update on our investment models after our Investment Committee had detailed Q3 meetings to determine what/any shifts in our allocations for client portfolios.  Here is a quick summary of notes and high level points we wanted to share:

  1. One thing we have learned over the past 20 years is that anything you can do to offset on the downside is more meaningful than adding a little extra on the upside.  It’s easy to make money when things are good, it’s harder to recover if your accounts get hammered during the bad times.
  2. Earlier this year, after the market recovered from its December 2018 record loss, we made small moves from growth to value in our models, and moved around 5% from equities to fixed income.  As you may remember, this move was NOT a market timing approach, but risk management as the market hit record levels and global growth showed signs of slow down.
  3. Based upon our recent meetings, we are going to make a few more small tweaks that slightly add to value stocks over growth, as well as we identified two active fund managers that we decided to fire and hire an index fund with much lower fees.
  4. We will continue to monitor the trade deal with China and the Fed’s strategy, and have already identified our next step towards risk management later this year depending on what happens in each area.
  5. Yes, the yield curve inverted, which typically is a sign of a recession.  However, it usually means we are 12-18 months out and some of the best gains come prior to a recession, so the key is to start preparing but NOT panic.  Our process is solid, well thought out, and devoid of emotion.

Our commitment to our clients is to always focus on the right asset allocation, avoid emotional market timing, and try to get the best return for the lowest fee possible.  We believe these changes accomplish slight moves in the right direction in each of these areas.

This is our job so that you can focus on other things and ignore the short-term noise!  We love what we do (even when the market is crazy and annoying!)….