Investments Halftime Report

“As we experienced this past quarter, uncertainty is a constant presence and volatility can return to markets at the drop of a pin (or a tweet, it seems, these days).”

So concludes the second quarter “halftime” investments report for our clients. If you’d like to read the entire report, and you’re reading this in an email, just click here.

Otherwise, if you’re reading this on the website, please e-mail one of us and we will share it with you.

Those of us who own equities need to prepare for the inevitable, temporary decline. The less you look, the more easily you will stay invested, and earn the opportunity of higher returns. Volatility is the short-term price we pay for potentially greater longer-term returns.

We believe we are in a cycle—a good one—but it is a cycle that does change, and it will cool down. Eventually the rate of growth cannot, itself, continually expand. The media will portray this as bad news. Whether the news you are about to read says “Year over year” or “quarter over quarter, growth declines” it will sound bad—but it’s not as bad as “losing money” or “no growth.” In fact, it’s inevitable and normal and healthy. At some point in time, acceleration must decline.

We are still growing, economically speaking, and in very large part, so are our investments, diverse as they are. The economic news will not be accurate until it is too late. Consider this: we’ll have been in a recession for six months, at least, before the experts will have defined it as a recession. How can that be? It’s a logical truth: by definition, a recession is six months of declining growth, which is only knowable in hindsight. Which begs up the question, how newsworthy is news that is at least six months old?

Our research teams look forward, not backward. These women and men look to the future, diversify, and make their own prudent decisions based of their unique strategy, consistency and conviction.

One of our research partners believes the bad times have already begun—but he is an outlier—and the majority of pundits are still positive. Perhaps this surprises you. Why? Have you been listening, reading or researching in the financial news media? What have you read out there that has been accurate this past 10 years? I’d like to know—seriously—because for my entire career, I’ve been inundated by the “nattering nabobs of negativism” who may, someday, again be right—but had I followed their advice it would have been costly, if not suicidal.

Furthermore, we’ve a lot of extraneous events to look forward to in the second half of this year, some of which I outlined last week. Now, more than ever, it’s a good time to tune out the financial news media.

This has been an unusually long U.S. economic and market cycle. But we firmly believe it is still a cycle, and that our patience and fundamental valuation discipline will potentially be well-rewarded. As always, we appreciate your continued confidence and trust, and we work hard every day to continue to earn it.

As we spend time this summer everywhere but staring at inaccurate and unimportant economic forecasts, ignoring scary social media and news (that must be six months old, at least, to be informative) let’s feel thankful. Our plans are in place. Our wealth managers are here for us—and we are here for each other.

Death of equities, 40 years ago today
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