There is currently much hope for another fiscal stimulus package to be delivered to the economy from Congress. While President Trump recently doused hopes of a quick passage, there a demand for more stimulus by both parties. While most hope more stimulus will cure the economy’s ills, it will likely disappoint due to the “second derivative effect.”
There has been a significant ongoing litigation that involves several trusts that were organized by JP Morgan. This litigation is at its end-stage, and, at this point, there are minor court rulings coming out. The court rulings involve the timing as well as the amount of the settlement that needs to be paid out to each trust by JP Morgan. ESM is constantly looking at these bonds when they are offered into the market.
Everything was working according to plan this week, until Friday morning. As news hit that President Trump and the First Lady contracted COVID-19, so did the market at the open with Dow down roughly 450 points.
Given the challenges facing the markets over the intermediate term from a “contested election,” a lack of financial support, a pandemic resurgence, and economic disruption, the risk of a deeper correction remains.
Given the challenges facing the markets over the intermediate term from a “contested election,” a lack of financial support, a pandemic resurgence, and economic disruption, the risk of a deeper correction remains.
The asset management industry is dominated by a buy-hold-hope mentality, which makes sense in most cases because, statistically, the equity markets go higher 80% of the time. We are taught that to achieve great long-term returns, we must be willing to ride through periods of high volatility and that corrections happen along the way. Considering that the long-term average peak-to-trough drawdown in the S&P 500 is 14%, I believe that most financial advisors and clients would agree that a smoother ride would be the preferred way. Strong returns with lower volatility along the way sounds a lot like having your cake and eating it too. What if this might be possible?
The asset management industry is dominated by a buy-hold-hope mentality, which makes sense in most cases because, statistically, the equity markets go higher 80% of the time. We are taught that to achieve great long-term returns, we must be willing to ride through periods of high volatility and that corrections happen along the way. Considering that the long-term average peak-to-trough drawdown in the S&P 500 is 14%, I believe that most financial advisors and clients would agree that a smoother ride would be the preferred way. Strong returns with lower volatility along the way sounds a lot like having your cake and eating it too. What if this might be possible?
Many bond portfolios consist of investments that replicate the Bloomberg Barclays U.S. Aggregate Bond Index (the “Agg”), which does not include about two-thirds of the investable fixed income space. These bond portfolios leave many investors under-exposed to the broader fixed income universe and with concentrated risk exposure to rising interest rates.
October was marked by continued volatility across fixed income and equity markets as investors faced various challenges, including persistent inflation concerns, rising yields, tightening monetary policy, and the backdrop of a U.S. Presidential election.
As an investor, it’s nice to know what we should expect from President Trump, because we have seen the movie before in 2017 – 2021. Apart from the early part of the Pandemic period, the economy and stock markets generally performed well.
Remember, our investment in stocks is a De facto vote of confidence on the economies in which we invest. Earnings, revenue, margins, free cash flow, and the growth of these important metrics is what drives stocks up or down over time.
The discretionary sector struggled as did all growth and quality-oriented areas of the market in 2022. That was a classic re-set and a raging opportunity to add exposure.
Catalyst Funds
Rational Funds
Strategy Shares