Our Investment Committee has been meeting over the last couple weeks to rebalance all client portfolios as we have done over the last 20 years.  I wanted to share with you some of the highlights and notes of our what and why:

  1. We expect to see volatility over the coming year with the election, potential for interest rate drops, geopolitical issues, and any wild cards we can’t even predict at this point.  Therefore, we will continue to hold a slight focus towards more value equities over the high growth sector, especially considering growth had a big run last year and value lagged.  We feel this is a more prudent stance to take, while still keeping a meaningful sleeve invested in the growth sector should the markets keep roaring higher.
  2. As you may or may not remember, the last couple of years we held a higher exposure to alternatives, and lessened our bond exposure as rates were increasing.  We now have moved that alternative exposure back to bonds now that they are paying higher rates and they appear more stable.
  3. While you heard a lot about the “magnificent 7” (Apple, Amazon, Google, Facebook, Nvidia, Tesla, and Microsoft) being up close to 90% last year, it’s important to point out that in 2022 they were down 46%. For most investors, that type of volatility is not sustainable from an emotional perspective. Meanwhile, the S&P only returned around 13% equal weighted return (versus over 20% market cap weighted). Why is this important?  Our goal is to dampen these extreme moves of a few stocks that could affect our clients’ returns in a milestone year (buying a house, retirement, selling a business, etc.) and potentially smooth out the ride. Similar performance, much less volatility is our goal.
  4. I stand by our philosophy on the best way to make money in the market long term is to not screw up during the bad times! Our only goal is to build portfolios and financial plans that can weather the test of both good and bad markets. Remember, it’s not about timing the market, but time in the market.

I hope that message was taken with positivity, conviction, and passion as it was intended.  We love what we do and want to help our clients have the healthiest journey to financial freedom in a what constantly seems to be a world full of chaos and news channels full of negativity.  Let our team know if you have any questions and Happy New Year!  Buckle your seatbelts, it’s likely going to be a “fun and exciting” ride……

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