Take a look at last week’s market recap from Joe Gallemore, CIMA® Partner & Director of Investment Management for Argent Bridge Advisors. Watch the video now!
Joe’s Notes:
Current state of things
- Stock markets have done well this year. The S&P 500 is +29.3% so far and just today, 12/28, hit a fresh all-time high.
- While equities have a number of tailwinds behind them, some risks factors exist, which they usually always do. Currently its inflation and interest rates, 2020 was economic shut down and unemployment, and in previous years it was trade wars and Brexit.
- It’s reasonable to expect volatility in an environment like this and it’s important to keep our expectations grounded. Looking at the past 40 years, 37 separate calendar years had downturns greater than 5% at some point in the year. 23 of those saw corrections of 10% or more. With only a few days left, 2021 saw a maximum repricing of 5.2%, which was essentially the month of September.
Q1 Rebalancing
- Now, with volatility expected, we feel it’s important to bring the focus back to our process. And by this I’m referring to our periodic rebalancing of your portfolios.
- A key component of our management process is continuous monitoring your asset allocations and realigning those allocations when investments and assets classes drift because of performance.
- Rebalancing regularly can help improve returns by systematically trying to sell high and buy low.
- Often we make an active decision to make no changes. Short term market moves of only a few % don’t really compel a change.
- But there is some seasonality to the market, and while it’s not automatic, the first quarter usually offers a good opportunity to rebalance accounts back to target allocations. And we plan to do this in the coming months.
- If the market starts off the year by taking a few steps back, may see the trading sooner rather than later, but regardless of when it happens, it is all simply part of the investment process which we have stuck to for years.
So that does it for 2021. We want to thank everyone for their continued confidence and trust. Have a Happy New Year!
