Global markets continued to expand during the second quarter of 2019, albeit with more volatility and at a slower pace than the first quarter. By the end of the first half of 2019, US equities led the way, with the benchmark S&P 500 Index advancing 18.54%. International equities, as measured by the Bloomberg World Index, were up 14.03% and even Fixed Income was positive, with the Barclays Aggregate Bond Index up 6.11% in the first half of 2019.
The three main equity strategies that we manage here have all fared well in the first half of 2019. The Biondo Focus Strategy was up 16.98%, the Biondo Growth Strategy increased by 14.55%, and the Biondo Dividend Strategy appreciated by 12.21%, all net of fees through June 30, 2019.
As markets corrected in the fourth quarter of 2018, market participants were mainly concerned with the Federal Reserve tightening interest rate policy and the developing US-China trade war. In 2019 the Fed has become increasingly more dovish and expectations are now for cuts in interest rates in a reversal from policy stance for the past two years. While there still is no trade deal with China, there was a recent truce between President Trump and President Xi Jinping at the G20 meeting. The combination of these two factors has largely alleviated investor concerns and has led to US markets piercing all-time highs here in early July.
From a fundamental standpoint, US economic data has been mostly middling. While employment data continues to be robust, economic growth remains sluggish although positive. One area of concern for investors is that the yield curve has inverted – that is, the shorter-term 3-Month Treasury Bill is yielding more than the 10-year Treasury note. Yield-curve inversion is widely viewed as a reliable predictor of impending recession – every recession since 1956 has been preceded by such an inversion. However, there have been several instances where inversion did not predict recession. We believe this is one of the many factors that has altered the Fed’s stance on rates and certainly worth watching.
From a technical standpoint, there is not a lot to dislike about US equity markets. In early July we advanced to all-time highs yet investor enthusiasm appears muted. The money flow analysis that we conduct continues to point bullish, making us optimistic for further gains.
In early July we advanced to all-time highs yet investor enthusiasm appears muted. The money flow analysis that we conduct continues to point bullish, making us optimistic for further gains.
Given the current backdrop – markets at all-time highs yet mixed economic data, there is no better time to review your goals, revisit your future expectations and risk tolerance. While we take great pride in our investment strategies, our ability to align the factors that make you unique as an investor with the appropriate portfolios is what sets us apart. If you have not had a recent review, I strongly urge you to do so to make sure that you are capturing all of the value that our firm brings to bear, including WealthMap, Riskalyze and WealthSense.
WealthMap is our comprehensive financial planning process and tool that allows you to organize all of your financial accounts regardless of which institution they are held at, collaborate and plan for any financial goals that you have, safely and securely store and manage your most important financial documents, and have access to all of this information from any mobile device.
Built on a Nobel Prize-winning framework, Riskalyze quantifies the semantics of the financial advice industry, replacing confusing and subjective terms like “moderately conservative” and “moderately aggressive” with the Risk Number, a number between 1 and 99 that pinpoints your exact comfort zone for downside risk and potential upside gain. Our Wealth Advisors are then able to pair our investment strategies to match your Risk Number and chart a clearly defined path to your goals.
WealthSense will cover a wide range of Behavioral Finance topics, with the ultimate goal of educating our clients to become better investors. We live in the age of information, and there is no shortage of financial news and coverage available. Along with that comes misinformation, and our goal is to act as your filter in order to allow you to make more informed and better decisions.
While we take great pride in our investment management capabilities, when clients do not let these strategies work to their long-term benefit, they risk the ability to achieve their long-term financial goals. Proper planning (WealthMap), a true understanding of risk tolerance (Riskalyze), and financial education (WealthSense) are three very important areas that we add value and greatly increase the odds that you as a client will allow these investment strategies to work for you over time.
Global markets and the strategies that we manage for clients have performed above expectations thus far in 2019. While the future is impossible to predict, many of the indicators that have served us well over time have us leaning optimistic as we look to the balance of this year and slightly beyond. Our time-tested investment process and methodology, combined with our planning, risk management, and educational capabilities give us great confidence in our ability to serve your various needs over time. I strongly urge you to schedule some time to meet with us to address any questions or needs so that you can live your life with the financial confidence that you deserve.
On behalf of our dedicated team, we wish you all the best for a safe and healthy summer. We look forward to seeing you or hearing from you and, as always, appreciate the trust and confidence that you have placed in our firm.
Joseph P. Biondo
Chief Executive Officer
Chief Investment Officer
Sources: HAS & Wealthscape; strategy returns, Bloomberg; index returns, CNBC; fed rates, employment data, Observer.com; US China truce, Marketwatch.com; July record highs, Forbes.com; treasury yield, Brogan Equity Research; money flow; Dorsey Wright; relative strength
The information set forth regarding investments was obtained from sources that we believe reliable but we do not guarantee its accuracy or completeness. Neither the information nor opinion expressed constitutes a solicitation by us of the purchase or sale of any securities. Past performance does not guarantee future results.