In the March issue of our monthly flagship publication, we feature:

  • On the Record by Chief Investment Officer Tony Roth, where he explores the shift in prioritization among the three major geopolitical and economic risks facing markets right now against a broader backdrop of slowing global growth.
  • In Focus by Portfolio Manager Clem Miller is about “Intelligent Alpha,” in which he takes a deep dive into alternative data—boiling down a complex subject to its essence, bringing home its significance to investors, and revealing how every industry will look to leverage their greatest asset.
  • Investment positioning, major themes, and asset class positioning updates.

Financial markets change like quicksilver for a variety of reasons—new economic data, unanticipated geopolitical developments, and of course, human emotions. And along with those fluid markets, the different risks at play— and the degree to which they pose a threat—change as well. We believe that, in order to be a successful investor, it is important to be flexible in adjusting one’s view when the facts change and, perhaps more difficult, hold the line when markets are being driven by fears rather than fundamentals.

That approach has served us well over the years and especially in the last six months. After a strong first half of 2018 for U.S. markets, and in light of our view that the U.S. economy would begin to slow in 2019, in August we took down our equity risk by 1.6% and elevated our cash holdings to slightly above our long-term strategic benchmark. That timing was fortunate, as equity markets then took us all on a wild ride, with the S&P 500 falling almost 20% beginning in September before bottoming on December 24 and then bouncing 18%, to bring us now just 5% from the market’s all-time highs. While the fourth quarter was unsettling to say the least, throughout that market tumult we maintained our view that markets were overly pessimistic on the economic fundamentals and the U.S. economy was not heading into a recession any time soon. We held our ground on overall risk positioning— shifting some equity exposure from international developed to U.S. large cap in December, and only modestly reducing risk at the beginning of February—which has served our clients well as equity markets have bounced back in spectacular fashion.

Please see important disclosures at the end of the article.

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