Take a look at the April market recap from Joe Gallemore, CIMA® Partner & Director of Investment Management for Argent Bridge Advisors. Watch the video now!
March closed out Q1 and ended up being an oddly similar microcosm of the quarter as a whole. The month started on a short up-tick, then declined sharply through the middle due to the Silicon Valley and Signature Bank failures, and closed on a strong finish.
The S&P 500 returned +3.7% for the month and almost all of that came in the final week, specifically the last 3 days.
- Similarly, in Q1 January was a very strong start, the market retreated significantly in the month of February, and then recovered a lot of January’s gain in March.
- So Q1 ended +7.5% for the S&P 500 and most other equity indexes were also up mid-single digits.
In the midst of the strong finish to March/Q1, economists became very vocal of impending economic slowdown due to softening data. As a result, more recently, in the first week of April, we saw a decidedly risk-off sentiment take over the market. Stocks cooled off and the US Aggregate Bond index, which returned +3% in Q1, added a whole other +1.1%, to elevate its return so far this year to over +4%.
Lessons to Take Away from Q1:
- Don’t try to do market timing. It is a losing proposition which is essentially an established fact in the investing world. Q1 was a great example of the roller coaster of emotions that a market timer has to be concerned with that had almost no predictability to it. So just know ahead of time that you’re going to stay invested, then stay invested, and you’ll have history on your side.
- Asset Allocation is hard at work. In times of stress different asset classes can move in the same direction. We saw this last year with the highest inflation in over 40 years as both stocks and bonds declined. But now that assets have repriced and interest rates are in a whole new time zone, different asset classes are each facing their own set circumstances. The different indexes we all watch together are moving in different magnitudes and even in different directions week to week; bond investors are once again seeing meaningful income, and even savers are being rewarded with decent yields on some cash instruments. So a diversified allocation, who’s primary objective is to moderate risk, is currently working to provide multiple sources of return.
Joe Gallemore, CIMA®, Partner