Broker Check
 

Wealth & Pension Services Group
William Kring, CFP®
Chief Investment Officer
04/09/2019


Q1|2019 Portfolio Commentary

Are We Happy Now?

It’s been three months? Year-end seems like so long ago since our last quarterly update and so much has changed. We last checked in with a mid-quarter update on February 20th and listed some factors we believed were driving the market. We discussed low rates, low inflation, an accommodative Fed, strong investor sentiment, and earnings growth as positive factors. We listed trade talks as hopeful. As we move into Q2, it seems all these positive factors are still in play and the trade issue continues to improve. Currently, we would only add one negative factor; that in the latter part of the quarter, a slowing global economy looked possible again, with poor manufacturing and export data coming out of China and Germany.

Other quarterly noteworthy action was the yield on the 10-year, which went below 2.4%. The upside from such a sharp move was a decent return in core bonds along with a boost to home sales and mortgage applications. So, on balance, the move lower in rates is more positive than negative for now. And, the yield curve inversion, the hot topic last quarter, has mostly moved to the background as a potential recession signal. As we move into Spring, expect things to bounce between news on trade talks and the global company until earnings season starts again.

For the quarter, we are extremely pleased with our performance. Sometimes the hardest thing to do, is to stand firm. It would have been easy to move to cash as the market looked like it was melting down around the end of the year. We just didn’t see enough reasons to abandon this bull market yet. While things looked bleak, we said, “for now, in the absence of any actionable data, it’s too early to worry about a recession.” Again, we will wait for the evidence and stay appropriately diversified.

Overall, most asset classes did very well. The S&P had its best quarter since 2009. International equities trailed U.S. equities slightly but still yielded double digit returns on unhedged dollars. Small stocks also did well. Bonds, were a bright spot, making small gains on declining interest rates, even as stocks rallied. Benefiting nicely from the current state of jubilation, our portfolios had excellent returns, with gains between 8-13% depending on risk tolerance and asset allocation. The Morningstar Moderate Target Risk with 85% stocks, returned 8.4%, by way of comparison.

We look forward to quarterly earnings season, and the direction of this resilient economy – which seems to keep finding a way to move along in a positive direction – not withstanding small concerns that come and go.


William Kring, CFP®
Chief Investment Officer



Important Risk & Disclosure Information