Portfolio Management Update July 2023
The late-cycle economic phase with declining risks of garden variety recession calls for a balanced diversified portfolio with a tilt to cyclical stocks. With the Federal Reserve nearing the end of its tightening cycle and a resilient US economy pushing out any recession, an asset allocation that addresses both slower economic growth and a reacceleration in future earnings is the way to position a portfolio at this stage of the market cycle. Primarily, when the Fed stops tightening then historically it is time to buy stocks, Long-term Bonds, and not Treasury-bills. Typically, stocks and bonds have outpaced cash after a Fed hiking cycle ends.