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Portfolio Management

January 4, 2023

Portfolio Management Update January 2024

The late-cycle phase marked by an end to Federal Reserve rate hikes calls for a balanced asset allocation strategy that addresses slower economic growth, lower inflation, and an eventual rebound in interest rate sensitive investments. A balanced strategy, investing more evenly in both stocks and bonds offers current income, and potential appreciation in equity and bond prices as the stock and bond markets rally in response to lower interest rates. Also, a balanced strategy would dampen portfolio drawdowns as Goldman Sachs reports that bonds are yielding near their historical average now and bond prices are once again inversely correlated to equities in corrections. Historically, S&P 500 index returns are usually positive after peak in yields based on an NDR study. The same can be said for areas of the bond markets. What is more, current bond market yields are historically attractive enough to compete directly with stock returns so on a risk-adjusted basis it makes sense to invest in both.

Portfolio Management Update January 2024
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