Investment Recap Third Quarter 2018

The major stock market indexes moved up over 7% in the third quarter, this was before a significant correction which occurred during Wednesday, October 10th and Thursday, October 11th. Our performance did not match the big market jump but we are more concerned with realigning our portfolios to the new higher interest rate environment.

Our portfolios contain 4-5 stocks that are in the process of either being taken over, split up, or similar liquidity events. Therefore, we have cash and the opportunity coincident with what we believe to be an inflection point in the market to redeploy a significant percentage of assets. For our balanced accounts, we have been nibbling at 2 year US Treasury notes. These yields have more than doubled over the last year and are now above 2.8%. For our equity clients, we see great opportunity in adding to value stocks versus “momentum” growth/ glamour stocks. Thus we have been, and will continue to add to financial, energy, industrial, and health care companies.

It is our belief that 20% earnings increases, strong business and consumer confidence will propel the stock market higher in the final quarter of the year and somewhat higher interest rates will not a) cause a recession, or b) draw significant flows out of stocks. The news cycle simply creates more drama, volatility and nervousness.