Commentary

September is considered the least pleasant month for stocks by market historians. This proved not to be the case this year as every major asset class turned in solidly positive results. Propelled by this unusually strong September, the S&P 500 index actually achieved its best January through September returns since 1997. 

While the month and the quarter were strong, they were not without periodical stress and drawdowns. The third quarter was full of unique events leading to elevated volatility. These included weaker than expected employment reports, the unwinding of the Japanese Yen carry trade, a selloff in artificial intelligence (A.I.) stocks and Israel's expanding war in the Middle East.

All of this was overshadowed, however, when the Federal Reserve cut interest rates on September 18th.

The Fed has not lowered rates since taking them all the way down to 0-0.25% at the start of the pandemic in March 2020. After COVID, supply chain bottlenecks coupled with consumers awash in liquidity fueled accelerating inflation, prompting the Federal Reserve to raise rates aggressively. From March 2022 to July 2023 the Fed raised rates by a total of 525 basis points, hitting the highest fed funds rate in a generation. The point when the Federal Reserve changes from raising rates to cutting rates (September 18^th) is referred to as the “Pivot” and is widely considered bullish for both stocks and bonds.

In just over 30 days we should resolve a major uncertainty for the financial markets… the elections. As seems to be the norm going back to the late 90s, this election is very contentious and closely contested.  Increased rhetoric and wild prognostication is actually leading some to ponder moving their investments to cash until the outcome A) is known and B) their candidate/party emerges victorious.

Speaking specifically regarding investments, history is very clear on this point… stay focused, stay disciplined and stay invested!

We will be discussing this in greater detail at our upcoming event:

Electionomics: Hops, Votes and Market Trends!

You are hereby invited to join us as we review the coming election in detail over brews.

Karbach Brewing on Friday, October 25 at 6pm

Please RSVP to: https://redwhiteandbrew.rsvpify.com

RISK NUMBERS

As of 10/04/2024

The Risk Number is at the heart of a sophisticated set of tools to precisely measure the appetite and capacity for risk that each client has and demonstrate their alignment with the portfolios built for them. The following graphic shows the risk of various asset classes as measured on a scale of 1-99 (1 being the most conservative and 99 being the most aggressive) as of the date above.

CENTRIC'S APPROACH

We start with a Risk Number, a measurable way to pinpoint how much risk you want, need, and already have. Then, your wealth advisor will optimally allocate our investments to help you reach your financial goals. Along the way, you will receive transparency of information, seamless proactive service and the trust and accountability you need to stay on track. All of this will lead to your personal comprehensive investment strategy that is powerful, disciplined, responsive. 

Sources:

Centric’s Market Assumption Disclosures: This information is not intended as a recommendation to invest in any particular asset class or strategy or product or as a promise of future performance. Note that these asset class assumptions are passive, and do not consider the impact of active management. All estimates in this document are in US dollar terms unless noted otherwise. Given the complex risk-reward trade-offs involved, we advise clients to rely on their own judgment as well as quantitative optimization approaches in setting strategic allocations to all the asset classes and strategies. References to future returns are not promises or even estimates of actual returns a client portfolio may achieve. Assumptions, opinions and estimates are provided for illustrative purposes only. They should not be relied upon as recommendations to buy or sell securities. Forecasts of financial market trends that are based on current market conditions constitute our judgment and are subject to change without notice. We believe the information provided here is reliable, but do not warrant its accuracy or completeness. If the reader chooses to rely on the information, it is at its own risk. This material has been prepared for information purposes only and is not intended to provide, and should not be relied on for, accounting, legal, or tax advice. The outputs of the assumptions are provided for illustration purposes only and are subject to significant limitations. “Expected” return estimates are subject to uncertainty and error. Expected returns for each asset class can be conditional on economic scenarios; in the event a particular scenario comes to pass, actual returns could be significantly higher or lower than forecasted. Because of the inherent limitations of all models, potential investors should not rely exclusively on the model when making an investment decision. The model cannot account for the impact that economic, market, and other factors may have on the implementation and ongoing management of an actual investment portfolio. Unlike actual portfolio outcomes, the model outcomes do not reflect actual trading, liquidity constraints, fees, expenses, taxes and other factors that could impact future returns. Asset allocation/diversification does not guarantee investment returns and does not eliminate the risk of loss.

Index Disclosures: Index returns are for illustrative purposes only and do not represent any actual fund performance. Index performance returns do not reflect any management fees, transaction costs or expenses. Indices are unmanaged and one cannot invest directly in an index.

Riskalyze Disclosure: The Risk Number^® is a proprietary scaled index developed by Riskalyze to reflect risk for both advisors and their clients. The Risk Number is at the heart of a sophisticated set of tools to precisely measure the appetite and capacity for risk that each client has, and demonstrate their alignment with the portfolios built for them.

Shaped like a speed limit sign, the Risk Number gives advisors and investors a common language to use when setting expectations, recognizing risk and making portfolio selections. Just like driving faster increases hazards, a higher Risk Number equates with higher levels of risk.

General disclosure:  This material is intended for information purposes only, and does not constitute investment advice, a recommendation or an offer or solicitation to purchase or sell any securities to any person in any jurisdiction in which an offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction. Reliance upon information in this material is at the sole discretion of the reader. Investing involves risks.