As you know, throughout 2022, our Investment Committee made small, but meaningful, defensive tweaks to your strategy. We believe these changes helped to position us during a volatile year where there was nowhere to hide (the Bloomberg US Agg Bond Index was down 13%, S&P 500 around 20%, and Nasdaq around 33%). We weren’t market timers then, and we aren’t now, however we still believe defense is the best offense.

Currently, we feel the risk/return tradeoff for equities when compared to bonds doesn’t feel fruitful for the foreseeable future. Despite that, we also know that the market can easily shift to an uptrend while things still feel “yucky” and surprise us all. So, we will never abandon our long-term approach for clients by making drastic moves in client portfolios. We do encourage you to make sure your bucket 1 is where it needs to be, by exploring options for favorable interest rates on your cash with the increase in interest rates, which wasn’t the case really for the past 15 years.

We may look for opportunities to help increase our defensiveness in our strategies in the coming weeks following the same themes below, but here are the moves we’ve made and where we stand:

  • When it comes to equities, we continue to remain balanced between growth and value. We feel given the current state of the market, this is prudent
  • Although we have added some to international companies this year, we do still favor US companies. As the dollar does begin to weaken some this year it could provide a tailwind for international companies; but with a strong dollar, the US is still the place to be
  • As rates have increased, this caused the fallout in bond prices last year. We stayed on the short end of duration in our fixed income and remain there. We have slowly started adding duration throughout this year.
  • With our short duration holdings, we’re able to receive decent coupons, while keeping those holdings nimble in case they need to be moved to longer duration, or equities if there’s a selloff and if a tailwind for equities comes to fruition (rate cuts, inflation collapsing).

CALL OR EMAIL US if you are at all concerned about your plan.  If you have your 3 Buckets in place, and things are steady, then ignore the noise and let us do our “thing” for you.  If things have changed, or you aren’t sleeping at night, let’s meet or talk.

These times aren’t as fun as the 3 preceding positive years for the stock market, but what makes a good investor is knowing how to stay the course, make adjustments when necessary, and focus on the things we can control.  We are here for you!


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