What Happened: · February markets started off the month with a bit of a bounce back from the hard hit we took during January, but January’s many concerns remained. And volatility persisted. The most defining moment came at the end of the month as Russia invaded Ukraine. U.S. markets in general took a large hit, with the S&P 500 down over 3% for the month and at roughly -8% for the year. · Growth equities continued to see the worst of it, while Value has fared relatively better, assisted by surging energy and commodities related companies. International Markets also took a hit, with the EAFE down roughly 1.8% and Emerging markets suffering worse around -3% for the month. · US bonds prices continued to fall during the month and with the aggregate down ~4% YTD. While treasuries and other high-quality debt has historically been safe place during such global turmoil, the Feds actions to hike rates has keep some downward pressure and the yield curve flat. Both the 5-year & 10-year treasury yields remained just below 2%. Emerging Market debt, largely driven by Russia, plummeted, down nearly 12% as of the end of the month. · The world response to the aggressive and deadly actions of Putin to invade Ukraine sparked significant sanctions against Russia. The anticipation going forward is that if sanctions on Russia continue for extended periods, not only will Russia’s economy continue to spiral downward (along with the Ruble), but much of Europe feel some negative impact as well. What we Did: · Proxy continued to keep focus on the longer term, especially since such geological events tend to have short lived impacts on financial markets. In this case, the current pressures on global supply chains will likely continue to grow the many sanctions and their impact, which can add more pressure to the highest inflation seen in 40 years. We did reduce some of our direct Emerging Market exposure in our Global Equity models. Even prior to Russia’s invasion of the Ukraine, we did not have a very positive outlook on Emerging Market. · Growth continued to be out of favor by the Market, as much of it is characterized by higher risk and promises of future earnings. When the present is nebulous, Wall Street has even less appetite to bet on the future. The Proxy Growth portfolio stuck to its discipline because short term volatility historically is compensated by long term focus. Our diversification into small and midcap growth which had been a detractor prior, seems had found some support and added positive returns. The recently downtrodden Large Cap. companies are now down approximately 12% on year. · Proxy also stayed the course within the value oriented, Dividend Income portfolio. We benefited from adjustments made at the end of 2021, as we leaned into energy and precious metals adding companies such as Newmont Corp and TC Energy Corp. These additions not only added to the outperformance of the S&P in 2022, but also boosted the 12-month yield to 3.7%. · Regarding fixed income, higher quality and lower duration have helped our performance in this difficult period for bonds. Rising rates will affect most any fixed income position, whether through mark-to-market volatility or decreasing face values. We made no changes and will continued to stay away from low credited quality and Emerging Markets. What we are Watching: · Like every person in the free world we keenly observing the war which Putin has brought on the people of Ukraine. Our hearts go out to the people of and in Ukraine. While there is no point in attempting to make sense of the actions of a mad man, we are focused on the spillover effect of the growing number of sanctions against Russia. So far, we don’t see a dire scenario that would warrant adjustment of financial plans and goals. Stay the course of your plan for now. As with anything in life, if matters escalate we will let our clients know. · Supply chain issues, record level inflation, Fed rate hikes and the end of its asset purchasing in March are also top of mind as we watch market volatility continue in this still young 2022. · Aspects of all this uncertainty may give the Fed some pause when it comes to how hawkish they might be with the initial rate hikes and maybe even the total number of increases. A more dovish approach should benefit the market. Overall, the US economy was healthy prior to Putin’s invasion. If spiked energy prices, increased supply chain issues and a hawkish Fed do all culminate into a recessionary environment, it will possibly be short and shallow. We are not overly concerned about a slowing economy because of the healthy employment market.
What Happened: What we Did: What we are Watching:
With everything in the world moving so quickly, we want to remind everyone to take a moment to ensure that we are being the best version of ourselves at all times. Proxy is implementing monthly book recommendations to help motivate our clients and advisors to put their best foot forward in everything they do. The first book we are tapping into is “Good In a Room” by Stephanie Palmer. This book provides a lot of key tips that are essential to help make better connections and develop more meaningful relationships. For example, when in a meeting the way you speak is just as important as the things that you say. Stephanie states that you should pitch yourself as if it were a first kiss – “flirt with small information and gauge interest based on what you hear.” This can help make anyone more interested in the conversation and leaves room for others to throw some ideas down on the table. Stephanie really hammers the nail on the head when it comes to focus, material and asking questions. She presses, “listen to your client like they have 20 minutes to tell you where the treasure lies.” Listening allows you to properly adhere to the conversation, process accurate information, and leave room for questions. A great tip she gives is “don’t ask ‘why?’’ and insists that using “tell me more” is a great way to encourage further detail. This process of listening and asking questions can also help build greater rapport with not only your clients, but people in your day to day life. Preparing your material is another huge step in becoming good in a room. “Failing to prepare is preparing to fail.” Do the research, set-up a strategy and show the commitment that was put in. Once you are fully prepared, it is important to remember to stay in sync within the conversation. What this means is that you must mirror the same pace, depth and tone of the client. It is a subtle reminder that they are the spotlight. When the flow is there, it can lead to a deeper relationship with the client. However, there are ways to fracture the conversation as well. Any fracture can easily be prevented by remaining professional and avoiding any common nuances as that will set you apart from competitor advisors. Stephanie encourages the reader by stating, “Don’t ask, ‘Am I right?’” This takes away from the client. She also lets the reader know that giving their opinion on an idea or telling the client their opinion is a big thing to stray away from. The whole point of this is that the client is the most important – this is not about you. All in all, there were a lot of important takeaways from “Good in a Room.” The advice mentioned within this book is easy to understand, and apply to your work or daily life. “Good in a Room” – Stephanie Palmer Disclaimer: Investing in financial markets carries risk, including loss of principal. You can lose some or all of the money that is invested. Past performance is no guarantee of future results. The material contained herein is for informational purposes only. This document does not constitute a recommendation of securities, securities portfolio, transactions or investment strategies. The projections were created based on hypothetical information, there is no guarantee that any of them will come true. Proxy Financial is a registered investment adviser. Proxy and its Financial Advisors are not licensed in all states to offer securities and insurance products. This site is not a solicitation of interest in any of these products or services in any state in which the registered representative is not properly licensed.
What Happened: What we Did: What we are Watching: Disclaimer: Investing in financial markets carries risk, including loss of principal. You can lose some or all of the money that is invested. Past performance is no guarantee of future results. The material contained herein is for informational purposes only. This document does not constitute a recommendation of securities, securities portfolio, transactions or investment strategies. The projections were created based on hypothetical information, there is no guarantee that any of them will come true. Proxy Financial is a registered investment adviser. Proxy and its Financial Advisors are not licensed in all states to offer securities and insurance products. This site is not a solicitation of interest in any of these products or service in any state which the registered representative is not properly licenses.
What Happened: What we Did: What we are Watching:
What Happened: What we Did: What we are Watching: Disclaimer: Investing in financial markets carries risk, including loss of principal. You can lose some or all of the money that is invested. Past performance is no guarantee of future results. The material contained herein is for informational purposes only. This document does not constitute a recommendation of securities, securities portfolio, transactions or investment strategies. The projections were created based on hypothetical information, there is no guarantee that any of them will come true. Proxy Financial is a registered investment adviser. Proxy and its Financial Advisors are not licensed in all states to offer securities and insurance products. This site is not a solicitation of interest in any of these products or service in any state which the registered representative is not properly licenses.
What Happened: · For September, the US equity markets had its first negative month of performance since January. Domestic Year-to Date performance has remained strong through the end of the 3rd quarter with major domestic indexes still holding their gains while achieving positive returns of at least + 10%. The S&P 500 has returned + 14% through the end of September. The NASDAQ index, returned a negative -5.3% in September and now stands at + 12% Year-to-Date. The Russell 2000 Index, which measures the performance of smaller sized companies returned -3% in the month of September and has returned +11.6% for the year. · International Equity Markets also were negative in September. The developed countries as measured by the MSCI EAFE Index were down just over 3% in the month, while still finishing out September + 6% on its performance for the year. The MSCI Emerging Markets Index was down – 4% in September, bringing its year-to-date performance to now just under – 3% for 2021. The Brazilian equity markets as measured by the BOVESPA stock Index was pretty much flat coming into the month of September, it also participated in the equity market selloff loosing -6.5% in the month and now sits at -6.75% for 2021 through the end of September. · US Fixed Income was also down in September, as measured by the Bloomberg US Aggregate Total Return Index. September’s performance was – 0.87%, bringing its total return for the year to -1.55% through the end of the third quarter. The yield on the 10 Year US Treasury rose to the 1.5% levels up from 1.3% where it began the month. We know as yields go up bond prices are going down, so we expect fixed income performance to be challenged in this low interest rate environment. In the commodities arena, Oil was one part of the market that experienced a positive month in September appreciating over 9% to now $75 a barrel. For the year Oil has appreciated +54% in 2021. In the precious metals space Gold was down just over 2% in September and now down -6% on the year pricing at $1,775 / oz. Silver was down over 8% in the month of September and now at $22 / oz. sits -16% below where it began the year. What we Did: · Coming off a strong 2020, the growth asset class continued to experienced a rotation to the value class. While this is not unexpected, the wealth management team has stayed true to our discipline, seeking new growth opportunities as valuation return come back down. At the same time, we are looking to make sure there is still significant runway ahead for our portfolio companies to achieve significant capital appreciation. The concern so much momentum is that some of the names in the portfolio may have reached a fair or full valuation. We continue to evaluate not just how our portfolio companies are relatively positioned within their industry versus their competitors, but also that they can continue to achieve outperformance versus other opportunities found within the equity growth mandate. Focused on long term growth, we have found short term volatility can often create great opportunities if you know what you’re looking for. · Core Global Equity portfolio, we continue to stay the course with our global equity allocation. The portfolio has performed positively as we continue to participate in the current bull market cycle. Our continued concern for Chinese equities has helped protect on the downside. Our concern for a mid-cycle pullback has increased which is leading us to proceed with caution as we slightly increased our exposure to assets such as Gold, US Treasuries & Gold, to hedge against a possible market downturn · In our Dividend Income Portfolio strategy, which has been the more conservative of the equity portfolios, we continued to prepare for a market pullback. The portfolio which has an income, cash flow centric focus is positioned well above our targeted yield of 2x the S&P 500. The portfolio is currently yielding approximately 3.5%, while the S&P 500 yields around 1.3%, considering the interest rate environment we feel that this level of income generation is working for our clients. The inclusion of a High Yield fixed income ETF increases the diversification of the asset allocation while also maintaining our income cash flow centric portfolio mandate. What we are Watching: · There were some major global news stories in recent months that have the potential to disrupt the global economy. The United States withdrawal of Afghanistan brings an end to 20 years of war. This could begin to signal a less influential U.S. around the globe. Look for other powerful nations like China and Russia to start to assert their influence abroad in strategic locations. Areas to focus on for example; Taiwan, the Korean Peninsula, South China Sea. Also, countries like Iran or the Ukraine could serve as a hotbed of geo-political tensions, which could certainly change the landscape of the global economy. China’s recent banning of bitcoin and the default of Evergrande, China’s second largest property developer, has raised concerns over the long-term investment outlook for the world’s second largest economy as well. · Company earnings and outlooks sentiment will be a focus as we turn the corner to head into the end of the year. September rattled the bullish investors and now some investors point to a lack of a new catalyst to bring the market higher. Severe weather and supply chain issues will be mentioned often in companies’ earnings call as negative factors that effected the bottom line. Inflation data will be in focus to see if these economic pressures are here to stay or more transitory. Non-Farm Payrolls are still way below pre pandemic levels raising concerns about the labor market. With Federal unemployment benefits rolling off the labor market could gain back some willing workers. The unemployment rate currently sits at 5.2%. · Policy from Washington DC, always another area of focus. We’ll be watching to
Disclaimer: Investing in financial markets carries risk, including loss of principal. You can lose some or all of the money that is invested. Past performance is no guarantee of future results. The material contained herein is for informational purposes only. This document does not constitute a recommendation of securities, securities portfolio, transactions or investment strategies. The projections were created based on hypothetical information, there is no guarantee that any of them will come true. Proxy Financial is a registered investment adviser. Proxy and its Financial Advisors are not licensed in all states to offer securities and insurance products. This site is not a solicitation of interest in any of these products or service in any state which the registered representative is not properly licenses. What happened: · The United States equity markets had another positive month in June. Technology was back in favor alongside energy which has been the best performing sector in 2021. The real estate and healthcare equity sectors also performed well in June. · The S&P 500 was up + 2.2% in June and has returned + 14.4% through the first half of the year, closing out the second quarter at record high levels. The NASDAQ Composite Index was up + 5.5% in June, bringing its year-to-date performance to + 12.5% (as of 06/30). The domestic small cap sector, measured by the Russell 2000 Index, also had positive returns during the month of June returning + 1.8% and + 17% over the first half of 2021. International equity markets continue to lag behind the United States. · The MSCI EAFE (Europe, Asia, Far East) was slightly negative in the month of June but still had a positive return over the second quarter + 5.1% and was + 8.8% year-to-date (June 30). Emerging markets were also positive for the quarter but trailed compared to the more developed markets. The MSCI Emerging Markets Index returned + 5% in the second quarter and + 7.5% over the first half of the year. · The fixed income markets also gained slightly in the month of June, with interest rates falling, the Bloomberg Barclays Aggregate Index returned + 0.7% in the month of June and returned negative – 1.6% over the first half of the year. As default rates continued to drop, investors were willing to pay up for extra incremental yield buying lower credit quality bonds, as well as bonds with longer-dated maturities, so higher-yielding credit and more interest rate sensitive types of bonds have recently performed well. What we did: · We mostly stayed the course on our U.S. equities. We actively reduce our direct exposure to China. We took some gains, while in other positions we also realized some losses. We increased our cash position across our core equity and our growth portfolios (both hold over 4% cash now). · In our equity dividend strategy, we added a few new names increasing our targeted average yield to over 3.5%. Actively adjusting our portfolios during this period, we strive to provide our clients with the ability to lose less on the downside and gain more from the upside by buying fundamentally good companies that become cheaper during these down-market periods. · When it comes to fixed income & bonds, there is not much that we strongly view as attractive right now. We do not see the U.S. Federal Reserve increasing interest rates during uncertain times. U.S. Treasuries at these lower yields we still view as unattractive longer-term investments, being selective within the fixed income space will be key. Corporate bonds and higher-yielding bonds are likely to be in focus should yield pick back up and prices fall. What we are watching: · We are seeing domestic equity markets continue to lead upward, setting new record highs to go along with the accommodative monetary policy coming out of Washington D.C. International markets remain a laggard with COVID & the Delta variant concerns really starting to jeopardize the strength of the global recovery. · The Chinese Communist Party turned 100 recently and they clearly seem to be getting ready to challenge the United States as the other world’s economic superpower. China is taking a strong stance toward regulating their technology companies, with more oversight, the companies will have to move away from western investment capital. The goal is to bring home the investment returns and technologies back into China. · COVID and its variants are a major global concern dragging down what might be a speedier recovery. Large unvaccinated populations have seen a spike in cases recently as the summer months have gone on. How the governments around the globe decide to respond will be important, will the global recovery be stunted? · We think volatility is going to increase, since markets were up around 14%, measured by the S&P 500, over the first half of the year, we feel strongly about the possibility that equity markets will experience somewhat of a healthy pullback and then hopefully rally toward the end of the year. Corporate earnings from the second quarter will give us an insight into how the stimulus money is working its way through the economy. · Other questions to ask, what will come out of the eventual infrastructure bill, what are the changes to the corporate tax rate, are the recent economic inflation metrics here to stay or just transitory? Any changes to both our fiscal and monetary policies would certainly disrupt the markets. · We are keeping a keen eye on the political environment around the globe for any disruption in global trade or geopolitical tensions that could interrupt or upset the global recovery. · We expect sovereign governments to continue to challenge and regulate big tech companies, like Amazon, Facebook, and Google. The “crypto” industry will not be spared, eventually, global central banks will look to issue their own digital currencies. Ransomware attacks should concern both governments and companies alike, creating more of a need for a digitally secured world. · Plenty of variables to consider for the second half of 2021, we
What we did: What we are watching: We continue to keep an eye on the COVID-19 vaccination numbers globally, and how new COVID mutations and new waves might hinder recent efforts. Disclaimer: Investing in financial markets carries risk, including loss of principal. You can lose some or all of the money that is invested. Past performance is no guarantee of future results. The material contained herein is for informational purposes only. This document does not constitute a recommendation of securities, securities portfolio, transactions or investment strategies. The projections were created based on hypothetical information, there is no guarantee that any of them will come true. Proxy Financial is a registered investment adviser. Proxy and its Financial Advisors are not licensed in all states to offer securities and insurance products. This site is not a solicitation of interest in any of these products or service in any state which the registered representative is not properly licenses.
What happened: What we did: What we are watching: Disclaimer: Investing in financial markets carries risk, including loss of principal. You can lose some or all of the money that is invested. Past performance is no guarantee of future results. The material contained herein is for informational purposes only. This document does not constitute a recommendation of securities, securities portfolio, transactions or investment strategies. The projections were created based on hypothetical information, there is no guarantee that any of them will come true. Proxy Financial is a registered investment adviser. Proxy and its Financial Advisors are not licensed in all states to offer securities and insurance products. This site is not a solicitation of interest in any of these products or services in any state in which the registered representative is not properly licensed.