• Within the S&P 500, we continue to see a huge performance divergence between the largest and smallest stocks.  Through last Friday, the cap-weighted S&P 500 was down under just 1% YTD, but the equal-weighted index was still down more than 10%.  (A cap-weighted index places more emphasis on the largest stocks.)  At the current spread of over ten percentage points, there has never been another year where one of the indices was outperforming the other by a wider margin.  The graph below, as shown by the rising line, confirms that FANG+ stocks (the largest market caps in the S&P 500) are vastly outperforming the rest of the S&P 500.  This is a case of two very different markets within the same index.

  • Another disconnect in the stock market is the large difference between investor sentiment measures; The Citi Panic/Euphoria Model has been in “Euphoria” mode since early May – among the longest such streaks since the 90s tech bubble.  NASDAQ optimism is at its highest level since 2000.  The recent Investor Intelligence survey has a bull:bear ratio over 3:1.  But the AAII retail sentiment survey has not seen bullish respondents top 35% in three months.  And investors have pulled nearly $60 billion from equity funds since May.  These retail readings are far from showing investors’ complacency.  This lack of retail buy-in (a contrarian indicator) indicates the broader market may have more room to run.
     
  • Last week kicked off earnings season for Q2.  S&P 500 earnings are expected to plummet 45% for the quarter.  Earnings are expected to drop 25% in Q3.  For calendar year 2020, down 21%.  Investors are looking past these numbers as Wall Street is forecasting a 28% gain for 2021.  However, there is very little visibility into 2021 (and even 2022).  It appears to us investors are still hoping for a ‘V’ shaped recovery, even with the recent surge in coronavirus cases across the U.S.

TWELVE ONE-SENTENCE FINANCIAL RULES

Over the years we have come up with a number of simple rules and observations about investing.  Most of the rules below are our own, but sprinkled in are a few we’ve come across from others we think are worthwhile.
 

  • Personal finance can be summarized in nine words:  work a lot, spend a little, invest the difference.
     
  • Every five to seven years, people forget there are recessions every five to seven years.
     
  • During the last 100 years, there have been more 10% market pullbacks than Christmases.  Everyone knows Christmas will come, yet market corrections seem to surprise people.
     
  • Holding 60% of your assets in stocks and 40% in bonds isn’t perfect for everyone, but we can think of a thousand worse strategies.
     
  • Imagine how much stuff you would have to make up if you were forced to talk 24/7.  Remember this when watching financial news on TV.
     
  • Investors should not let Washington sway their investment decisions.Congress has been a dysfunctional swamp of disappointment since 1789, and stocks have done well ever since.
     
  • It is strange that most people go to a doctor once a year, but they check their investments once a day.
     
  • People should quit day trading and donate their money to charity instead—same financial result for the trader, and a better outcome for society.
     
  • Investors were probably better informed 25 years ago when there was 90% less financial news.
     
  • Change your mind as often as the facts change.
     
  • Judge analysts by the quality of their arguments, not the performance of their last trade.
     
  • Investors should read more history and fewer forecasts.
     
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.

January 2025 Market Commentary

The S&P 500 has had a 20%+ return for two years in a row. It has only rallied 20%+ in back-to-back years three...

November 2024 Market Commentary

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October 2024 Market Commentary

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September 2024 Market Commentary

August was a roller coaster for stocks. Moves lower in a roller coaster market can be terrifying, and in the first three trading days of August, investors had to contend with economic data showing what looked like a sharply decelerating economy and the unwind of the...

Monthly Updates

November 2024 Mid-Month Recap

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...

October 2024 Mid-Month Recap

INVESTORS BALANCE SHEET – PROS AND CONS Here are a few of the pros and cons investors should consider when forming an opinion of the stock market.  It is always important for investors to look at both sides of the argument even if they feel strongly in one direction,...

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