Broker Check

Wealth & Pension Services Group
William Kring, CFP, AIF - Chief Investment Officer

Q1|2018 Portfolio Commentary

Portfolio Review

The market started the year with a bang and ended with a fizzle.

After a superb January, stock market concerns began to percolate with the prospect (and distaste) for interest rate acceleration and ended with trade- war threats and tech weakness. Stocks are now a bit better off in the valuation category, but not so well-off in the sentiment/momentum category.

Bond market concerns were prevalent throughout most of the quarter and subsided some near the end, with rates retreating from their ascent to three percent.

Having said all of that, it’s worth noting one fact; the last quarter was the first negative quarter for the S&P 500 over the last nine.  Nothing good lasts forever.

Portfolio results for the quarter were consistent with major asset class returns which ended in a tight cluster of flat to negative returns. U.S. Stocks were down about one percent, while international stocks and bonds were both in the red about 1.5%. Relative bright spots were in emerging markets, up about 1.5%, while the weak dollar and Europe were laggards. Portfolio results were even with our benchmarks

Helpful Asset Allocations for the Quarter

  • Emerging Markets

Detracting Asset Allocations for the Quarter

  • Weak dollar/Euro Stocks
  • Large Value

Looking Forward

Valuations are now just slightly elevated, and there are no material recession indicators. Traditionally, this has been a green light for staying invested.  However, the elephant in the room is now global trade.  We expect continued “headline” volatility on this front, and at this time don't see any meaningful way to handicap the near-term effect.

Setting the trade worries aside, the market may come to realize that a three percent ten-year is not the end of the world and that stocks are still a better buy.  This quarter should also go a long way in strengthening – or not - the tax benefit story the market seemed to like so much. If we don't get continued follow through on earnings from tax-related "assistance," we may need to re-evaluate our positive bias. For now, we will wait and see.

Finally, Europe has been a bit of a disappointment with earnings coming in slower than expected. We will need to see a pick- up in profits to maintain the thesis that lower valuations can provide more upside potential than in the US.

Although we report on a quarterly basis, our views on the global markets and economic trends are longer-term, requiring us to be patient with our investment and allocation decisions.

Our goal is to provide our clients with excellent long-term performance and ongoing peace of mind. We seek to achieve this through strategic asset allocation decisions, cost controls, investment selection, risk management, and tax management. Please refer to your performance report for your account returns and let us know if you have any questions.

Thank you for your continued trust in our firm, and please let us know if you have any questions.

William Kring, CFP®, AIF®
Chief Investment Officer

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