By SJS Senior Advisor & Director of Institutional Investment Management Kirk Ludwig.
It’s human nature to ponder what the future holds and what it means to your investments. As the market grapples to understand the long-term implications of the COVID-19 pandemic, global trade, elections or (fill in the blank), the market continually factors known information into today’s prices, whether we understand all of the underlying factors, or not.[1] With so many variables influencing future market movements, it is a challenge to predict how the markets will respond…yet, investors still try to speculate on what happens next…we can’t help it, it’s our nature!
During periods of great uncertainty, markets can change course quickly, creating high volatility while the markets reprice risk. These periods, like we are experiencing in 2020, can be very perplexing to understand. How can stocks move higher when the future seems so uncertain? Are historically low interest rates signaling slow growth and low inflation for many years to come? What does the rise in the price of gold signal to the markets? These types of questions are endless.
Think of the market like a sports gambling bookmaker. If you were to place a bet on the outcome of a professional sporting event, you’d likely research who has home team advantage, injury lists, top player stats, and all the other factors which may give one team an advantage over the other. The bookmaker, and all the other gamblers, are aware of these same advantages. In order to even the playing field, the bookmaker will create a “spread”, giving the underdog extra points to compensate for these differences. At this point, you’re no longer betting on who wins, but you’re betting on if the spread is correct or not. This is much more difficult to predict!
The stock market, like the bookmaker, is always handicapping all known information. If you’re increasing or decreasing your risk exposure to stocks based on how you believe the current news will impact your investments, know that the market has already priced in these factors. What you’re really betting on is if your expectation is different than what the entire market, on average, is expecting. Again, a much more difficult prediction.
We don’t think that an investment strategy should be built on speculating if the market is accurately reflecting future expectations. More importantly, we think investors should reflect on how their investment strategy is positioned to meet their long-term desired outcomes based on long-term patterns.
At SJS, we focus our attention on the process and design. We develop portfolios to match the risk and return expectations of our clients through broad global diversification with the proper balance of growth and stability to match their long-term goals. We believe design matters most. Having the appropriate exposures to multiple asset classes and market factors improves the likelihood of a successful investment plan and removes the temptation to speculate on current events.[2][3]
If you would like to learn more about how to design your investment portfolio, feel free to reach out to us. We are always here to listen and assist!
Important Disclosure Information and Sources:
[1] “Eugene F. Fama, efficient markets, and the Nobel Prize.” John Cochrane, 20-May-2014, Chicago Booth Review.
[2] Unconventional Success: A Fundamental Approach to Personal Investment. David Swensen, 2005, Free Press.
[3] MarketPlus Investing® models consist of institutional quality mutual funds. Mutual fund investment values will fluctuate, and shares, when redeemed, may be worth more or less than original cost.
Advisory services are provided by SJS Investment Services, a registered investment advisor (RIA) with the SEC. Registration does not imply a certain level of skill or training. This material has been prepared for informational purposes only.
There is no guarantee investment strategies will be successful. Past performance is no guarantee of future results. Diversification neither assures a profit nor guarantees against a loss in a declining market.
Hyperlinks to third-party information are provided as a convenience and we disclaim any responsibility for information, services or products found on websites or other information linked hereto.
Suggested Reading
SJS Investment Services has been recognized in CNBC’s 2024 FA 100 list, an annual ranking of registered investment advisory (RIA) firms within the USA.
SJS Investment Services has been recognized in the Forbes / SHOOK 2024 list of America’s Top RIA (Registered Investor Advisor) Firms.
Every four years, we get the same question (whether you have asked it, or you are thinking it) – how will the election affect my portfolio?
As we approach the end of the year, we want to highlight some important financial items to review before the new year.
This Outlook includes our discussion of election time, financial to-dos before the end of the year, new SJS Perrysburg office, SJS Team updates, and looking forward to Q4 2024.
SJS Investment Services has been recognized in Financial Advisor Magazine’s 2024 Registered Investment Advisor (RIA) Ranking, an annual ranking of independent investment advisory firms within the United States.
As I approach my 40th anniversary as a financial advisor, I can't help but look back on the road I've traveled.
While people commonly hold their cash within checking and savings accounts, we want to highlight three short-term, interest-bearing investments that can be held within your investment account.
This Outlook includes Founder & CEO Scott J. Savage’s gratitude for your 40 years of trust, how you can earn more interest on your cash, welcoming new SJS Team members, and looking forward to Q3 2024.
For five graduating high school Seniors who shadowed us recently, we asked each student to write a summary of what they learned during the week.
One of The Ability Center’s services is the Assistance Dog training program, which helps individuals with disabilities achieve greater independence.
When working with investment managers, we want them to share that same client-first philosophy and sit on the same side of the table with us.
We want to emphasize some best practices that can help us work together to ensure your information and assets remain safe.
The Outlook includes our evolving MarketPlus® Investing philosophy by standing on the shoulders of giants, and ways to help protect your personal information and financial assets. We also highlight The Ability Center and look forward to Q2 2024.
SRDAX is a shining example of the value alternatives can bring to traditional stock and bond strategies.
As we begin the new year, we have some ideas for concrete actions to start your new year on the right foot, financially.
Isn’t this picture magical? It's Main Street in Sylvania, Ohio, the small town where I founded SJS over 28 years ago!
The SJS Q4 2023 Outlook includes our insights on small town values, MarketPlus® Investing, and planning financially for the new year. We also highlight new SJS Team members and look forward to Q1 2024.
To help you financially plan for 2024, we provide this resource with important numbers for the upcoming year.
SJS Investment Services has been recognized in the Forbes / SHOOK 2023 list of America’s Top RIA (Registered Investor Advisor) Firms.
In addition to family gifting, many individuals support giving to organizations that aim to help their communities. We highlight some strategies to make the most of your giving dollars.
You can consider putting excess cash into a money market fund, short-term U.S. Treasury bonds, or a short-term bond mutual fund / ETF.
The future of the housing market is uncertain, and its resilience will be a crucial factor in the broader economic landscape.
The SJS Q3 2023 Outlook includes our insights on gifting and charitable contributions as well as U.S. real estate. We also look forward to Q4 2023.
SJS Investment Services has been recognized in CNBC’s 2023 FA 100 list, an annual ranking of registered investment advisory (RIA) firms within the United States.
International Samaritan is a 501(c)(3) nonprofit organization that is working to break the chains of poverty and improving lives, particularly within garbage dump communities worldwide.
SJS has been recognized in Financial Advisor Magazine’s 2023 Registered Investment Advisor (RIA) Ranking, an annual ranking of independent investment advisory firms within the United States.
The SJS Mission is to empower you to build a better life. That extends to our teammates, clients, and community members.
The SJS Q2 2023 Outlook includes our insights on building up our local communities as well as market performance so far in 2023. We also share even more members of the SJS family and look forward to Q3 2023.
It’s important to recognize how difficult it is to predict what will happen in the short-term for investment markets, and how much margin for error there should be for any prediction.