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January 22, 2019
Q4 2018: Quarter in Review

For the first time in a decade, the S&P 500 Index posted a calendar year loss. Meantime, the domestic investment-grade fixed income market barely managed to turn positive for the year, the primary savior likely having been a flight to safety wrought by the equity market’s decline. The recent, rather sharp rebound in equities has us thinking investors found the selloff overdone. Still, we’d hesitate to offer the all’s clear. But, while we do find a range of reasons for going-forward caution, neither further volatility, nor a reasonably positive gain for 2019 will surprise us.

Download PDF: Q418 SAM Market Review

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January 7, 2019
Perspective in Crisis

For the past two years, we’ve made a point to highlight the natural ebbs and flows of global investible markets. A major part of the rationale was that over the past couple of years markets have been much less ebby and flowy than history suggests is possible...normal. Acknowledging that market-related headlines have turned qualitatively ugly over the past few months, we wanted to attempt to pull perspectives into the future. Before the latest ills, with time global equity markets always have recovered from whatever near- and medium-term chill they caught. While investors should regularly gauge their tolerance for medium-term drawdowns, they may find some solace in the understanding that the years ahead may still prove gainful.

Download PDF: 0119 SAM Commentary

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December 21, 2018
Worries Pooling

Usually not so many at once. While international equity markets have been pressured most of the year, U.S. equities are sharply lower since the end of September. While it’s generally usually more than a bit of a guessing game establishing causes for such shifts in market performance, we think the sudden severity of the recent decline left us thinking that such a review was worth exploring.

Download PDF: 122118 SAM Market Update

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December 5, 2018
Diversity's Differences

International stocks have strongly underperformed U.S. stocks this year. Such a large gap may lead many to questioning the value of owning stocks outside the U.S. As part of our investment approach, we see the inclusion of international equities as a natural extension of the diversification we pursue in all our portfolio exposures. Indeed, we see diversification across a range of historical periods as having allowed stronger performance among particular segments of the equity universe to offset weaker returns from others. The range of differences in performance and shifts in ranks among the segments over time may surprise some readers. That surprise is chief among the rationale for our pursuit of diversity.

Download PDF: 1218 SAM Commentary

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November 2, 2018
So Much Sideways

For the second time this year, the S&P 500 Index has experienced a near 10% dive from its short-term peak. As those short-term peaks were also all-time peaks, the plunges have generated an extra amount of drama in regard to their meanings. A range of obvious pressures remain: healthy-at-the-present but unknown future macroeconomic performance against a backdrop of growing global trade burdens, local- and geo-political angst and historically stretched domestic stock valuations. And we can point to those troubles as rationale for recent market throes. But, we believe still generally healthy global macroeconomic growth, steady-handed global central bank policy efforts and reasonably good corporate fundamentals should prove more informative in regard to medium-term market movements.

Download PDF: 1118 SAM Commentary

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October 13, 2018
Q3 2018: Quarter in Review

Thinking about the past three months, the word divergence comes to mind. Within equities, U.S. stocks continued to pull away from global peers as the U.S. economy furthered similar feats of distinction. Beginning later in the quarter and hastening in the current one, the domestic bond market sank anew, representing for many a departure from the conventional view of bonds as a source of relative safety. Despite the scale of these near- and medium-term shifts, we continue to believe that most portfolios may benefit from the additional diversification global equity exposures provide. And while the rising-rate environment may continue to weight bond returns in the nearer term, we remain confident in the belief that fixed income may provide appropriate portfolio ballast for those wishing to dampen equity-driven volatility.

Download PDF: Q318 SAM Market Review

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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

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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

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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

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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

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