The stock market is not the economy (and it has never been more true).  The markets are experiencing a moment of optimism after suffering the sharpest drop into a bear market in history.  The magnitude of the recent price gains seems to be very optimistic regarding the forward path of economic normalization and earnings growth.  The S&P 500 rose 12.7% in April and is up about 30% from its March 23rd bottom.
 
Is the coast clear?  We don’t think so.  Markets should be careful about reading too much into the last seven weeks of gains.  The S&P 500 is still down 15% from its February high and off 11% year-to-date.  The equal-weighted S&P 500 is down 19% year-to-date.  And the median stock price is off about 25% from its peak.
 
The economy, meanwhile, is in apparent freefall.  GDP fell –4.8% in Q1, the biggest drop since the Great Recession, and expectations for Q2 are the stuff of nightmares (estimates range from a decline of -15% to -40%).  The economic pain is most apparent in the labor markets.  Job losses have been staggering and in only two months’ time dwarf job losses in prior recessions, as shown below.

The unemployment rate now stands at 14.7% compared to 3.5% in February.  Still, the economic reality is much worse than the jobs numbers suggest as a result of how the government statisticians calculate the employment figures.  For example, there has been a steep drop in labor-force participation which is not reflected in the numbers.  It also doesn’t include those who are now involuntarily working part-time, or otherwise have their hours reduced as businesses operate in restricted ways.  In reality, one in five Americans is out of work, in our view.
 
Economists debate about the ‘shape’ of the recovery.  Of course, no one can know for sure, but we are skeptical of any hopes for a V-shaped recovery.  Markets may be latching onto some optimism that some states are reopening, but a gradual lift-off from current shelter-in-place regulations is not the same as a broad economic recovery here or abroad.  The market is not only under-appreciating the labor-market damage, but it’s also underestimating the duration of the global recession.
 
Our intent here is not to focus only on the bad because there are plenty of positives (low interest rates, Federal Reserve stimulus programs, U.S. Government stimulus packages, resolve of the American people and other factors).  Maybe the biggest positive is the Fed ‘put’ – that is, the Fed has announced they will provide as much liquidity as necessary and are viewed as a backstop for the markets.  But fundamentals still matter and right now the future is less certain than ever.  Stock prices at these levels assume the recovery falls neatly into place.  However, if more layoffs flip from temporary to permanent, more hours are slashed, and workers face challenges in finding a new job, investors will need to rethink current stock market levels.
 

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?

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.

Recent Commentaries

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

April 2026 Market Commentary

EARNINGS DRIVE STOCKS, NOT HEADLINES The drawdown in stocks has been accelerating since our last commentary.  Through...

February 2026 Market Commentary

January was a battle between high quality stocks and lower quality stocks. Lower quality stocks won.  That includes small and micro caps.  (Our view is that the primary small cap stock index, the Russell 2000, is a low-quality index.  About 40% of stocks in the index...

January 2026 Market Commentary

THE INVESTMENT LANDSCAPE FOR 2026 Happy New Year!  The beginning of a new year is as good a time as any to take an inventory of important variables affecting investors and to see what the investment landscape looks like.  The summary below attempts to do just that....

December 2025 Market Commentary

Current retail investor sentiment is mostly mixed so not much to be taken from that. However, one indicator stands out.  Last week the CNN Fear and Greed Index was sitting at one of its most “extreme fear” levels of the year – see below. Source:  CNN Remember that...

Monthly Updates

April 2026 Mid-Month Recap

If you find that your portfolio’s investment returns are dominated by a small handful of stocks, you are not alone. We have experienced the same thing. Burton Malkiel (renowned author of the classic “A Random Walk Down Wall Street”) did a recent study about this...

March 2026 Mid-Month Recap

In January we wrote the “three-headed monster” (courtesy of Bespoke Investment Group) was flashing green. The three variables – oil, Treasury yields, and the dollar – were all in downtrends which bodes well for stocks.  In the last three weeks we have seen a massive...

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