This Week in the Market

With Scott McCaghren and Tony LaPorta

Domestic equity markets have been largely news driven lately, with nothing more than sideways price patterns. This bodes well with our current portfolio as our positions have performed as anticipated.  There remain several significant news-worthy events on the horizon which will undoubtedly have an impact on the major indices. The most notable would be the G-20 summit which will likely lack the procurement of a long sought-after trade deal with China. We must also acknowledge the seasonal trends of the marketplace during summer months, which are overcome with lack of participation from the major banks/investment firms. While this does make the dissection of the investment landscape a bit more difficult, we firmly believe that our current positioning is conducive for two types of environments:

1. Typical sideways summertime trends that produce very few actionable events

2.  Unexpected bouts of volatility that could be cause by a myriad of geo-political events taking place in the world today.

The leading reason as to why our portfolios can accommodate both of these scenarios lies in the very fortunate timing of the implementation of our hedge. We have a good deal of protection lying inside of every portfolio that will allow us a fair amount of flexibility in dealing with either environment laid out above. To say it as modestly as possible, this type of positioning is hard to find across the board right now. Most money managers have either been uber-bearish over the last several years or have been caught in the dramatic shifts in the markets as of late. As for us, we have been able to dynamically adapt to current conditions by including holdings with higher than average expected returns while also neutralizing potential capitulation risks with our volatility hedge. I attribute this combination to our leading analysts that are constantly evaluating your portfolios in order to serve you the best risk-adjusted returns as possible.

We conclude this commentary with a few facts that seem pertinent for the balance of 2019:

 

  • The S&P 500 has closed at its calendar year high in the second half of the year, 74% of the time, since 1950

  • The average return for the S&P 500 during the last 23 “presidential third-years” has been a gain of 16.1% (both Democratic and Republican)  ***this not a political statement, our job is to evaluate the numbers

  • The average 65-year old American has accumulated savings that will sustain him/her for 9.7 years; roughly 10 years short of the necessary funding for the current average life expectancy

 

We have decided to revamp our weekly commentary to include not only market related activity, but also a few facts that a few of our readers might find pertinent on a daily basis. Please feel free to suggest any alternative formats that you might feel to be more informative. Conversely, please feel free to inform us that you find the current commentary of value or informative.

 

As always, we continue to monitor all equity, treasury, commodity and currency conditions in order to efficiently deploy capital as well as protect invested assets.

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