Latest Investment Committee Notes and Updates

To no surprise based on history, this year may have a lot of you scratching your heads. We came off one of the worst calendar year returns for the global markets last year and entered this year with mounds of economic uncertainty… interest rates the highest they’ve been in decades, banks failing, layoffs hitting the headlines every other day, the list goes on. The media had more than enough to discuss regarding negative news. However, the United States stock market and certain companies that are included in it have been resilient in the face of headwinds. The market has moved higher, and companies are still making profits.

Going forward, as we’ve stated all year, we believe the path toward new all-time highs in the indices will be harder to come by compared to the rally we’ve been in this year. The impact of higher interest rates is yet to be felt economically across all corners of consumer demand (credit cards, auto, home, business, etc). Inflation is coming down but is still present and higher than the FED’s target rate of 2%. Unemployment is healthy but is usually one of the last indicators of a worsening economic environment.

For our strategies, we believe the following:

1. Value equities still remain a large part of our positions as opposed to high-octane growth equities. The majority of the indices returns this year have been from a handful of mega-cap stocks. But as we look forward, we believe that small-caps and value companies will come back into favor.
2. International (ex-China) is becoming more attractive to us as defensive dividend-payers can be a favorable investment strategy when the dollar weakens. We slightly increased our international exposure at the start of the year, and believe it will continue to come back into favor.
3. Cash is back! While cash used to be a dead asset class, we’re thrilled to be making favorable yields as the result of these interest rate increases. While this is good for emergency funds and timelines under 12 months, we exercise caution here, interest rates will come down eventually, and so will cash rates.
4. Bonds. Finally, interest rates are higher, and we’re starting to see bonds with yields surpassing that of cash. When interest rates come down, that’ll be a tailwind for fixed income. We have been increasing duration across our allocations to fixed income with the goal of capturing yield and potential bumps in total return over the coming months.

When it comes to the stock market, the media tells us there’s always something to worry about and there’s always economic uncertainty. For you, for us, for long-term investors, our focus must shift to focusing on things we can control, not the things we can’t. We can’t control what the market does each minute, hour, or day. We can’t control unemployment and we can’t control the future. What we can control is our big picture financial plan. We can control how we spend our time each day and the things we choose to think about. We can choose to focus on the positive things in life. We can choose to be positive. We can choose to value time over money. We can choose to spend more time with our family, loved ones, and friends.

We’re here to help, this is what we love! Reach out if we can do anything for you and your family.

This is not a replacement for the official customer account statements or trade confirmations from Raymond James or other custodians. Activity details including time and price will be included in the official statements and confirmations.  Investing involves risk and you may incur a profit or loss regardless of strategy selected.

The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of David Adams and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice.  There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct.  Past performance does not guarantee future results.

The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investor's results will vary.

Holding stocks for the long-term does not insure a profitable outcome. Investing in stocks always involves risk, including the possibility of losing one's entire investment. Dividends are not guaranteed and must be authorized by the company's board of directors.

Bond prices and yields are subject to change based upon market conditions and availability. If bonds are sold prior to maturity, you may receive more or less than your initial investment. There is an inverse relationship between interest rate movements and fixed income prices. Generally, when interest rates rise, fixed income prices fall and when interest rates fall, fixed income prices rise.

International investing involves special risks, including currency fluctuations, differing financial accounting standards, and possible political and economic volatility.