With an YTD gain of 22.1% through yesterday, the S&P 500 is on pace for its second annual 20% gain in a row. Surprisingly, that has only happened two other times:  first, three times in a row from 1954-56, and second, four years in a row from 1995-98.  However, the average S&P 500 member has returned only 17.0% YTD, more in line with the equal-weighted S&P 500.

From a technical perspective, support levels have been tested multiple times over the last few months and have generally held up well as shown below:

                                                                              S&P 500 ETF (SPY):  LAST 18 MONTHS

Source:  Bespoke Investment Group

Stocks continue to climb a “wall of worry.”  It is typical that the bears emphasize “bad” news along with market warning signs – that seems to always be the case.  But the current bull market has an excellent foundation:  strong earnings growth, easing monetary policy, solid breadth, and a powerful theme:  artificial intelligence.  The bull market remains intact.

The following quote on investing is from one of our investment heroes, Howard Marks from Oaktree Capital:  “The bottom line on the quest for superior investment returns is clear:  You shouldn’t expect to make money without bearing risk, but you shouldn’t expect to make money just for taking risk.  You have to sacrifice certainty, but it has to be done skillfully and intelligently, and with emotion under control.”

Coming into this earnings season, analyst sentiment was weak as more companies in the S&P 1500 had seen downside revisions to EPS estimates than upward revisions in the prior month. The silver lining is that this sets the bar low for companies as they report.  As we move into the heart of earnings season, 69% of companies reporting have beaten consensus EPS estimates, but only 56% have beaten consensus sales estimates (far weaker than normal).  In terms of guidance, only 6% have raised guidance compared to 9% that have lowered.  About three-quarters of AI stocks have yet to report.  Keep in mind earnings growth in 2024 is still forecast at 9.8%.

Like recent quarters, stock price reactions have been severe for those companies missing estimates or giving poor guidance.  Investors are not tolerant of companies that disappoint.  It is truly a market of individual stocks and their earnings.

ELECTION 2024

 

The Real Clear Politics (RCP) national average of polling moved to a dead heat last Friday.  The fact that Trump is tied with Harris nationally in the RCP Average is certainly a better position for Trump to be in versus where he was in 2020 and 2016, but this is still a close race and no one knows what the outcome will be.

Betting markets show something different.  They give Trump odds of roughly 60% to win the election versus 39% for Harris (electionbettingodds.com).  The betting markets generally have a good track record but can be wildly off the mark at times.  At this point in 2016, Clinton was ahead of Trump 80% to 20%.

We are not making investment decisions related to this election.  History shows market consequences of a certain candidate’s victory are unpredictable.  For example, when Trump was elected in 2016, expectations were that technology would underperform, and financials and energy would outperform.  The exact opposite was true.

Knowledge – Results

Experts in Risk Management

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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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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

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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Stay up to date with all of our latest comments and analysis.

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Monthly Updates

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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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