• Since the start of April, 87% of reporting companies have topped EPS forecasts, 75% have exceeded sales forecasts, 16% have raised guidance, and just 2% have lowered forecasts.  Overall, S&P 500 earnings growth is currently on pace to total 44% in the first quarter, which would be the best in a decade (source:  Bespoke Investment Group).  However, some investors are frustrated that many individual stocks didn’t respond to blow-out earnings (for example, most of the FANG+ stocks), but still the S&P 500 was up 5% for the month, a very solid showing.
     
  • There are comparisons being made between the 2020s and the Roaring 20s of last century.  The Spanish flu was followed by a decade that produced a 27.2% annualized real return.  Bulls think that Covid-19 will be followed by a long-lasting bull market.  But there are numerous reasons why the stock market of the 2020s will not be like the 1920s.  First, the 1910s was a terrible decade for the stock market (-4.9% annualized real returns) and so the 1920s had a low basis to build from.  In contrast, the 2010s was a high-performing decade, returning 15.3% annualized.  Second, this can also be seen with P/E ratios.  The P/E ratio at the start of the 1920s was 9.6x versus 20+ today.  Finally, the 1920s followed World War 1.  Economic booms typically follow major wars.  There was no equivalent war in the 2010s.

 

BIG MONEY POLL OF PROFESSIONAL INVESTORS

 

We love to read Barron’s semi-annual Big Money Poll of professional investors.  It tells us what the diverse group of money managers think about a myriad of topics.  The poll’s quite lengthy so what follows is only a summary:
 
Describe your investment outlook for U.S. equities in the next 12 months.
Bullish 67% (we are bullish)
Neutral 26%
Bearish 7%
 
Is the U.S. stock market overvalued, undervalued, or fairly valued at current levels?
Overvalued 38% (we think slightly overvalued)
Undervalued 5%
Fairly valued 57%
 
What is the biggest risk to the U.S. stock market in the next 12 months?
Rising interest rates 20%
Covid-19 resurgence/new variants 16%
Higher taxes 13%
Inflation 11%
Fiscal/monetary policy blunders 11%
Excessive stock valuations 7%
 
NOTE:  We place excessive stock valuations in the top three risks.
 
Which asset classes do you consider most attractive today?
Equities 64% (we agree)
Commodities 13%
Real estate 8%
Gold 5%
Cash 4%
Fixed income 3%
Crypto 3%
 
Which sector will perform best in the next 12 months?
Financials 22%
Tech 17%
Energy 15%
 
Which sector will perform worse in the next 12 months?
Utilities 34%
Tech 29%
Energy 10%
 
Finally, how concerned are you about the federal debt?
Extremely worried 36% (we agree)
Moderately concerned 54%
Not an issue 10%
 
We find it interesting that 67% are bullish, but only 5% think stocks are undervalued.  Our explanation for this is that we have the monetary and fiscal policies of a young, emerging bull market and an economy just coming out of a recession.  These early cycle characteristics outweigh the negatives of excessive optimism and high valuations normally seen in more mature bull markets.

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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?

Real Retirement Solutions

designed to improve
  • Wealth Preservation
  • Management of Risky Assets
  • Peace of Mind

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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As we mentioned in previous commentaries, Barron’s Big Money Poll represents the thoughts of large U.S. investment advisors. Their opinions and forecasts are what is discounted in stock and bond prices.  We think that is important. The recent fall edition of the Poll...

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