Quarter Recap
The market was quiet and steadily rose last quarter with the mantra, “No news is good news.” There really isn’t much to report from the past three months. We did a little bit of portfolio repositioning earlier this year, so we have just been letting our investments play out. We’ve gone through periods where we’ve been less active (like prior to 2020), then through periods where we were very active (all of 2020), and the last three months we went back into the phase of not moving our positions around too much. It can be very easy to overtrade, but, (most of the time) the best thing to do is nothing at all.
One area of the market did fool me a bit. It looked like the high flying tech names were going to falter for a moment last quarter. It looked ugly. The names that tripled and doubled during the pandemic felt like they were going to come in for a reality check. But then they didn’t. We were repositioning the portfolio for a little more of a selloff in the high growth names but that never happened and probably hurt our performance a little bit. With our low cash position it didn’t hurt us tremendously, but I have to acknowledge it didn’t play out as I thought it would.
Outlook
I don’t see much happening this summer. Earnings will be coming out here shortly and that tends to move markets a bit but I’m thinking and hoping for a quiet summer. I’m anxious to get some money to work for our newer clients or those that have made large deposits. But I’m taking it slow, only dipping a toe at a time until the water really warms up to jump in. It’s difficult to do but the market only usually provides one, maybe two, really good buying opportunities a year during a bull market.
One area I am emphatic about is bonds. Interest rates continue to move lower (especially the past month) despite the red hot economy. Maybe it’s older investors being more conservative or international investors piling in because interest rates are negative in their countries, but it seems like a horrible investment to me at this time. Inflation seems to be prevalent in wages and certain products (even if the Fed denies it) and I can’t see how investing for 20 years at 2% is a good idea. Stocks continue to remain attractive as long as you’re selective and diligent. I’m still a huge advocate that we need to see a period where both stocks and interest rates move higher at the same time before the stock market has any real competition for where investors allocate their money.