Subscribe to Insights

From the Investment Team

Read the latest research and insights from our Investment Team
Subscribe to updates...

Latest Podcast:

Latest Commentary:

October 7, 2018
Bonds Burdened, Not Busted

A fact of investing, bond prices generally fall as interest rates rise. This happens as holders of existing bonds sporting lower yields (which is the coupon paid divided by the price of the bond) sell them in favor of newly issued bonds carrying now higher going-forward yields. As the prices of older bonds fall, their yields rise. Initiated more than two years ago, a generally sustained upward shift in interest rates has pressured the broader bond market. But, those rate rises have left going-forward yields on fixed income investments materially higher. Further, continued strength in the broader economy has lifted equities, potentially offsetting drops in the fixed income side of portfolios exposed to both major asset classes.

Download PDF: 1018 SAM Commentary

Read More
August 31, 2018
Mileage Varies

Lots of folks talking about how long-in-the-tooth is this bull market. Some conclude the end is near. Others see room to run. Regular readers hopefully can guess what we think. Regardless how one determines bull markets, neither its eventual length, nor the length and depth of the drawdown that succeeds it are determinable in advance. Calling a bull-run “old” gives it an unwarranted sell-by date. Implying there’s great room to run similarly disregards market unpredictability. Bull-market variables like duration and magnitude do not have natural ranges. Cyclical bull/bear outcomes are further examples of market randomness. Suggesting otherwise serves little good in assisting clients in their pursuit of financial goals.

Download PDF: 0918 SAM Commentary

Read More
August 7, 2018
OK Missing Out

Fairly common to hear folks gabbing about how great a stock they own has performed. Common, too, having missed out on the run to the peak, the schadenfreude of those who avoided the downfall of former big winners. A recent example, we all might like to have seen our individual portfolios achieve gains like the shares in Facebook have seen since the company’s IPO in 2012. But, with this latest swoon yet another example, there’s been more than a bit of drama in the course the shares took to arrive at their current level. We think that’s true for all individual stocks and find that portfolio diversification in all its forms, while offering no guarantees, helps to avoid such duress.

Download PDF: 0818 SAM Commentary

Read More
July 18, 2018
Q2 2018: Quarter in Review

The second quarter proved mostly unexceptional. Sure, we could point to headlines and such, intimating at some connection between how markets reacted and reflecting on the performance of our models amidst those reactions. But, as we often note, such comments would be more conjecture than conviction. Besides, there really wasn’t much in the way of highlights (aside from one we’ll soon review). Although market volatility has risen, we might concede that markets are beginning to “work” in a manner more like that expressed in their pre-Financial Crisis past, a welcome return to ordinary.

Download PDF: Q218 SAM Market Review

Read More
July 6, 2018
Duck on Water

We attempt as often as we can to resolve many of the mysteries surrounding investment management and our version of it. Not always an easy task, as popular culture has left many with impressions far removed from the normal day-to-day activities that comprise our work. Rare is the frantic emotion suggested by cable financial news. Even rarer is agitated activity. By design, our work focuses on the client, who in our view generally doesn’t benefit from any such bustle. Rather, our approach is founded on the idea that the client is best served when investing is approached with calmer hands and longer-term goals in mind.

Download PDF: 0718 SAM Commentary

Read More
June 8, 2018
A Future None Divined

With the large-cap-stock focused S&P 500 Index now up 4.8% year-to-date, after its 21.8% jump in 2017 and its rarely interrupted run since the depths of the Great Recession, admonitions regarding the unsustainability of domestic equity market valuations are growing in number and volume. While we cannot argue statements of fact—that the immense gains have left U.S. markets nearly without precedent in regard to valuation—we can argue the implications. Certainly, there is meaning in stock valuations, and a present reading set against investment theory suggests future equity market returns may fall short of historical norms. Even so, the nature of market history suggests even more strongly that no metric, valuation-based or otherwise, can foretell future market movement. We thus continue to believe the best approach to managing exposure to market risk is one that focuses more on levels of market exposure appropriate for individual investment situations, rather than one that seeks to foretell and act in advance of market shifts.

Download PDF: 0618 SAM Commentary

Read More
May 6, 2018
Range of Outcomes

Fundamental to our approach to investment management is the acknowledgement that with most any increase in expected return, we also must expect an increase in risk. It is the balance between the two that we seek to match with client financial situations and goals. To help find that appropriate balance, we often turn to historical market data, which provide ample evidence for this simple rule. While we can’t be sure what the future will hold, we at least may seek to set proper expectations for what we might encounter. Such preparation we find goes a long way in supporting our endurance against whatever storms we may face and fostering our benefit from whatever good fortune markets may bring.

Download PDF: 0518 SAM Commentary

Read More
April 10, 2018
Q1 2018: Quarter in Review

Markets rose into the new year upon approval of sweeping tax reform in the U.S. Fortune turned in late January, though. Where investors once sought stronger inflation, it seems fears of too much of it saw perspectives flip. Compounding caution, increasingly contentious and sometimes erratic gestures from administrations around the globe left strategists warning of rising geopolitical tensions. Though the two forces had mixed effects on domestic bond prices, pressures from rising rates prevailed and fixed income returns were broadly negative in the quarter. Both trends lifted investor uncertainty to levels not seen in a few years, reminding many of the saw—past performance is not guaranteed—and leaving most segments of the equity universe in the red. Zooming out, equity investors may still find content in year-over-year gains easily in the double-digits, with now-higher yields potentially boosting bond returns going forward.

Download PDF: Q118 SAM Market Review

Read More
April 2, 2018
Risk in Context

With interest in and media coverage of investible markets so expansive, market volatility has become much more of a shared experience. Actual exposure to that volatility need not be. The design of our models acknowledges as much, with the range of exposures to investment risk they present offering flexibility to address specific needs of unique investors. While we utilize fixed income holdings to offset equity market risk, bonds are not without risks of their own. Still, the bond segments in which we invest generally are more stable than equity investments, offering the tools we seek to balance desired return with commensurate risk.

Download PDF: 0418 SAM Commentary

Read More
March 6, 2018
Rising Rate Review

More than a few folks are worried that interest rates are on the rise. Leaving aside the fact that rising rates generally are a signal of an improving economy, the concern may be warranted given the fact that bond prices generally fall as interest rates rise. Here as in so many other facets of investments, though, the perspective of time matters. As yields increase, we look to the potential for income from bonds to offset capital losses (as bond prices fall), a feature facilitated by the now higher yields on those bonds. Those concerned about the medium-term effects of higher rates on the bond portions of their portfolios may find some solace in this month’s review of past rising-rate periods.

Download PDF: 0318 SAM Commentary

Read More
100 Bayview Circle
Suite 100, Room 44
Newport Beach, CA 92660
linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram