Markets, Economy, Portfolio Management Update Winter 2022
Despite recent slowdown in economic growth related to Omicron effects, the U.S. economy remains in expansion mode. The CNBC Survey of Economist is projecting a median 4.3% real economic growth in 2022. A peak in Omicron cases and effective viral vaccines could bring about yet another Spring re-opening phase. Supply bottlenecks and shortages are a work in process that eventually fixes itself resulting in a moderation of inflationary pressure. Inflation pressures are peaking but will linger. Investors should consider high quality companies with pricing power offering dividend growth. Prepare for higher market volatility stemming from Fed tightening, geopolitical risks (Russia), slowing China economy, and the midterm elections. The period before midterm election is known for corrections due to uncertainty of outcomes. I would be a buyer in any midterm election correction.
Portfolio Management Actions Winter 2022
I’m gradually reducing overweight in equities towards neutral by quarter end. Large-cap Growth stocks are not likely to repeat last year’s performance. It is time to balance between Large-cap Growth and Value stocks. Market and macro-economic conditions suggest that Value outperforms. This year is a return to normalcy for earnings, economic growth, yields, and inflation compared to history. Normalcy supports equity markets. The US economy is moving away from Mid-cycle fundamentals towards early Late cycle. Portfolios will remain underweight in bonds until the Ten-Years Treasury yield peaks this cycle.
Portfolio Management Fall 2021
Portfolios are overweight equities going into year-end. I see positive earnings outlook until1Q220. Intermediate economic growth will remain above long-term average rate and interest rates historically low (supportive of earnings growth). Mid-cycle fundamentals suggest favoring cyclical value stocks and quality dividend appreciation stocks. Portfolios staying with underweight in long term bonds for now and increasing fixed income investments credit quality.
Q3 Portfolio Management
Portfolios are overweight equities relative to bonds and cash. The current economic environment favor stocks over bonds. Mid-cycle economic conditions are positive for economically sensitive stocks. Furthermore, the present interest rate environment still favors stocks over bonds and cash.
Q2 Portfolio Management
Portfolios are overweight equities, underweight bonds, and underweight cash-equivalents because the U.S. economy is in a robust expansion. Historically, stocks outperform bonds and cash-equivalents in an economic expansion experiencing rising yields. Economic conditions suggest diversifying into cyclical Value stocks.
Q1 2021 Portfolio Management
Global stocks are entering 2021 in a broad uptrend, anticipating that re-openings and continued central bank accommodation will support a robust global economic recovery this year.
July 17, 2020
Q2 2020 Portfolio Management Summary
While the upcoming election will add to the uncertainty and volatility of a market already beleaguered by Covid, opportunities for capital redeployment may arise.
April 1, 2020
Q1 2020 Portfolio Management Summary
How will Aspetuck position portfolios in the next quarter amid extreme market swings and what will most likely be several weeks of more dark news surrounding Covid-19 in the U.S.?