CIO Insights

New Year Energy

After a strong rally to conclude 2023, the new year rang in with a more cautious tone as small caps slid and large caps led. Stocks have now rallied for the third straight month, marking the longest streak since August 2021

A Tale of Two Years: ’23 In Review and ’24 In Prediction

Following a tumultuous and disappointing 2022, we faced a fork in the road in terms of what would lie ahead in 2023: a recovery and rally to claw back some or all the previous year’s losses or a continuation of the pain and tough times.

No Vember, No Problems

We don’t always know what the markets want, but we do know that the more easing they come across, the less problems they see. 

Bad Months Come In Threes

Stocks and bonds mutually declined for a third consecutive month, continuing on the zigzag, downward path that they each have been travelling since mid-July. After five months of spring and summer gains, both the S&P500 and NASDAQ have now dropped more than 10% from their highs, an ignominious achievement that lands both indices squarely in correction territory.

It's The Time Of The Season

Seasonal weakness. The September Effect. These terms are often used in connection with late summer, during which we historically have experienced the worst-performing months of the calendar (over the last 50 years or so). Just like the weather, market performance has its own “seasons” which are sometimes predictable and repeatable, and September is the only month in the year with a negative average return. This year was no different. 

Winning Streak Status: Snapped

All good things must eventually come to an end. In August, equity markets snapped five-month winnings streaks to post their first monthly drops since mid-winter. 

Pieces of the Pie: Asset Allocation 101

Asset allocation. An idiom as conventional to the investment management industry as “block and tackle” is to sports and “keep it simple” is to management consulting. And for good reason. Nearly always, asset allocation is the first crucial step taken in the portfolio construction process. As a result, its importance is broadly accepted and agreed upon – serving as the cornerstone of portfolio construction while simultaneously being the key determinant of overall risk and return. Important stuff, indeed.

Summer Rally Heats Up

US stocks – much like the July summer weather – were red hot during the month as the major indices notched robust gains, with the tech-heavy NASDAQ leading the way. That index joined the S&P500 to log a fifth straight month in the green, good for the longest winning streak since middle 2021. The July rally was uniform across all sectors and industries, lifting everything from small regional banks to the biggest tech companies in the country. Year-to-date, the S&P500 is up 19.5% - one of the best starts to a year that we have ever seen – while the NASDAQ is up 37%, and the Dow Jones Industrial Average is higher by 7.3% in total. Regarding the Dow, we saw an epic run in July where the “old-school” index closed higher for 13 consecutive trading days, tying 1987 for the second longest winning streak in history. What a year it has been so far, especially coming off a disastrous 2022 with peak negativity and bearishness that dominated sentiment on January 1st.


Mixed up May

Sell in May and go away. That is the old adage, isn’t it? This year, it depends on who you ask, and what you sell. The major equity indices were mixed during the third month of spring, with the NASDAQ up an impressive 8% while the Dow lost 4%. The S&P500 did make a new 2023 high this month, but it ended May basically unchanged. Traders felt relief and optimism from Q1 earnings (and Q2 forecasts), as corporate reports were not nearly as bad as they could have been. From a sector standpoint, we saw energy stocks sold emphatically alongside oil price declines, while mega-cap tech rose on the back of “AI Mania.”

Sweet April Showers

Spring has unofficially sprung! The month of April signifies regeneration and renewal, ushering in hope and optimism for sunny skies ahead (and the occasional rain shower). Winter’s frost is long gone, and our thoughts turn to baseball, backyard BBQ, and beautiful days. This bright outlook is on full display in the stock market, where April turned in another positive month, its third of four in 2023.