Stocks remain in an uptrend whether you look at short-term or long-term indicators.  We will focus here on the longer-term, the 200-day moving average.  As shown in the graph below, the S&P 500’s 200-day continues to make another leg higher and has yet to roll over:

                                                                S&P 500 200-DAY MOVING AVERAGE:  1991-PRESENT

Source:  Bespoke Investment Group

It would take many months of weak market action for this 200-day trend to shift lower.

Even with the market weakness since the July peak in stock prices, bears say we remain in a bubble (especially in tech).  But the NASDAQ 100 Equal Weight Index was exactly flat over the last three years as shown below:

                                                                NASDAQ 100 EQUAL WEIGHT INDEX:  LAST 5 YEARS

Source:  Bespoke Investment Group

While a few mega-cap tech names in NASDAQ got frothy, it is hard to say the market is in a bubble when the average stock in the index has gone nowhere over a three-year period.

Bullish investor sentiment has plunged since the market peaked last month. In fact, Investor Intelligence (financial newsletter writers) just saw its biggest two-week drop since the 1987 crash.  And bearish sentiment saw its biggest one week spike since November 2022 (American Association of Individual Investors).

As a contrarian, we love to see weak-handed investors scatter when the market turns lower because it clears out excessive optimism and allows long-term investors to buy at better prices.

 

WE REMAIN IN THE SOFT LANDING CAMP

 

Is a recession looming?  Not based on the Atlanta Fed’s GDPNow tracker which is forecasting 2.5% annualized growth for this quarter.  While this outlook may be revised down given the weak non-farm payrolls released on August 2, it is still inconsistent with the sort of slowing growth that tends to precede a recession.  Growth will need to slow very rapidly to get us to recession.  There are reasons we expect it won’t:

–      Market interest rates have already fallen by 100 basis points since May.  Even though the Fed hasn’t eased yet, expected easing has started to work its way into market rates which supports economic activity.

–      Mortgage rates have fallen over 100 basis points since the peak which should stimulate residential construction spending.

–      The Federal budget deficit is running around 7% of GDP.  Aggregate expenditures are a strong tailwind even if it doesn’t rule out a recession.  What this means over the longer-term is a big question for investors.

–      Job creation, while falling, is still reasonably strong.  Labor income growth looks sustainable and consumer borrowing has been low.  As long as consumer spending holds up, labor market concerns are largely noise.

We understand there are questions about consumer spending, but there are good reasons to believe that the fundamentals of the economy are strong as we recently saw from solid earnings reports this season.  We will, however, be monitoring trends in consumer spending closely.  Thursday’s Retail Sales print will tell us more.

Our bottom line:  We remain in the soft-landing camp.  A still-growing economy helps set the stage for higher corporate profits and stock prices.

Knowledge – Results

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Knowledge – Results

Experts in Risk Management

Are you prepared for the next market correction or financial crisis?

Knowledge – Results

Experts in Risk Management

Are you prepared for the next market correction or financial crisis?

Knowledge – Results

Experts in Risk Management

Are you prepared for the next market correction or financial crisis?

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This is achieved through an ongoing assessment of market risks given your specific financial situation and goals.

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Professional Expertise

Leadership Team

Richard Furmanski

Richard Furmanski

CFA

has been a portfolio manager and analyst for over 35 years. He manages conservative, tax-efficient portfolios for both pre-retirees and retirees. His lower risk approach appeals to investors who want less volatility and competitive risk-adjusted returns.

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Mary Ellen Adam

Mary Ellen Adam

Director of Operations

has been in office administration for over twenty years. Her experience includes customer service, firm operations, and office administration. She interacts with our clients on a day-to-day basis and handles any requests that may arise.

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Frequently Asked Questions

If you can't find the answer to your questions here, feel free to give us a call at 847-847-2505

Do you manage both stock and bond portfolios?

Yes. We build a portfolio of conservative, high-quality stocks and hold them for the long-term. The average holding period is 4 – 5 years. Our focus is on stocks that are suitable for retirement portfolios.

Our high-quality bond portfolios are designed to provide both income and stability of principal. Bonds provide the anchor for balanced accounts (those holding both stocks and bonds).

What is your investment philosophy?
We take great care in purchasing only high-quality stocks and bonds intent on a multi-year holding period. Portfolio turnover and taxable realized gains are modest in comparison to other active managers. We do not time the market but will become more defensive, in terms of stock holdings, when market conditions warrant.
Will the portfolio be managed in accordance with my financial goals?
Yes. Each of our clients has a custom-tailored portfolio. These custom portfolios are designed to meet specific client objectives with a thoughtful approach to specific constraints such as risk tolerance. And as each client’s situation changes, the portfolio does as well. There is no cookie cutter approach.
What kind of expertise do you have and how can that help me in difficult markets?
We have been working with high-net-worth clients like you since 1982. Over that time we have helped them to navigate several bear markets and financial crises (including the stock market crash of 1987). We hold the Chartered Financial Analyst (CFA) and Certified Financial Planner (CFP) designations.
Are you sensitive to taxes when managing portfolios?
Yes. Our holding period for an individual stock averages 4 plus years which means our turnover is low and realized gains can be carefully managed. Further, where possible, we tax loss harvest small losses as a way of offsetting gains taken elsewhere in the portfolio.
How have you performed?
Results will differ by client and the level of customization but we have provided competitive investment returns for many years.
How do you charge for your services?
We charge a management or consultant fee based upon the size and level of customization of the account. As the account grows, we benefit together.

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