Current Clients

Playing the Hand That We Are Dealt

As an investor, there are always outside forces to blame if your investments aren’t performing as you hoped. This spring has included a whipsaw of tariff actions, continued wars overseas, strain between the U.S. and our most steadfast allies, stubbornly high interest rates & inflation and a cautious Federal Reserve. 

Outside forces are by definition, things we cannot control. At the same time, market participants generally become aware of them at roughly the same time, and we have complete control over whether or not we choose to act on that information. Our action or inaction is what matters. What we choose to focus on, and what we choose to ignore for the moment, matters.

The unlimited rewards available in markets are naturally attractive to type-A personalities. Those same personalities tend to lack patience, and feel the need to take action when the markets become volatile. Far more often than not, the markets reward inaction.

While we nearly always preach inaction when markets are turbulent, it doesn’t mean we are sitting still. We continue to follow our investment management process, and we’ll be conducting our mid-year Core Portfolio review in June and July to determine whether we’ll be making any changes to the individual stocks that we own in client accounts.

Stated policy objectives of the current administration are a difficult thing to factor into that process, given the week-to-week, and sometimes day-to-day changes that are occurring. We do believe that it is important to look at general policy trajectories, and what companies those trajectories may favor or disadvantage.

One of those trajectories is a focus on increased export activity. The United States Trade Representative Office (USTR) has the herculean task on their hands of trying to formalize new individualized trade agreements with every one of our trading partners. While neutral deficits are likely to be elusive, a significant increase in export commitments from foreign governments seems like a pretty safe assumption.  What are the most sought-after U.S. exports that stand to benefit from increased orders? The list includes Crude Oil Products, Liquified Natural Gas, Medical Instruments, Orthopedic Devices, Soybeans, Corn, Gold, Airplanes, Helicopters, Gas Turbines, Cars, Delivery Trucks, Semiconductors & Packaged Medicines. Evaluating companies in these sectors, including the offsetting impact of tariffs on their own input costs, will be one of the focuses of our investment committee this summer. 

We also have exciting news in store for our clients about a new experienced investment analyst we’ve hired that will be starting on July 1st. According to a recent Wall Street Journal article, more than 8 out of 10 financial advisors are now outsourcing investment management to model portfolios controlled by entities that are far removed from the actual client. As part of our commitment to internal investment management, we have plans to grow our investment management team and expand our research budget substantially over the next few years with the objective to deliver the best possible returns, while allowing for the customization that many of our clients desire.

Sources:

https://www.wsj.com/finance/investing/more-financial-advisers-are-outsourcing-investment-decisions-a27ebc1f?mod=lead_feature_below_a_pos2, https://si2.schwabinstitutional.com/SI2/Published/Content/News/nh/online_security/resources/fraud-resources, https://content.schwab.com/learningcenter/safeguard_online_information.html