Recent stock market volatility serves as a timely reminder of the risks that investors must face head on. The Bear Market bottom reached a 5 year anniversary in March. With the cyclical nature of capital markets in mind, we continue to favor a balanced approach to investing with strategic asset allocation as the centerpiece.
Stocks aren’t cheap. Geopolitical tension is heightened with Russia and Ukraine. The Fed continues to taper its purchase of US government and mortgage-backed debt. A Malaysian jetliner is still missing. And through it all, Warren Buffet recently advised his heirs to invest in the US stock market. With so many competing factors to consider, it is no wonder that the investor class is smaller than it used to be. When it comes to allocating capital in the stock market, we just ask that investors take an honest look at both time horizon and risk tolerance.
If stocks are the performance driver of investment portfolios, bonds provide the ballast. In January, when stocks had a rough start to the year, bonds rallied. Even as interest rate normalization policy threatens bond prices, the decline is likely to be temporary. The role of bonds to moderate stock market risk is of higher importance than the unknown future movements of interest rates and the corresponding bond prices.
Cash as an emergency reserve and as a small tactical component of investment portfolios is as important as ever. Investing is often counterintuitive, and we are always looking for opportunities to put cash to work when stocks or bonds are on sale. We monitor accounts with respect to these fundamental investing principles and look forward to the following important dates on the economic calendar:
|April 22||Existing Home Sales|
|April 30||FOMC Interest Rate Decision|
|May 2||Unemployment Rate|
Please know that client account reviews are always welcome and we place high value on time spent together.