CIO Insights

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.

Marching To The Beat Of Its Own Drum

The beginning of the month was dark and stormy, but the end was so serene. March truly did come in like a lion and go out like a lamb. Despite banking crises in the US and EU, US layoffs accelerating, and the FOMC raising interest rates, the major equity indices delivered impressive performance during the month. The NASDAQ 100 was up over 8% – its biggest monthly gain since 2010 and highest close since last August. From a technical standpoint, the NASDAQ is over 20% off its low and has thus begun a new bull market. What a turnaround from just a few quarters ago! It was not just the tech-heavy NASDAQ that surged. Other common benchmarks were also strong, discounting or outright ignoring less sanguine economic data. All told, the S&P500 ended 3.67% higher. Indeed, the luck of the Irish smiled upon equity markets this month.

Happy Birthday, Mr. President

George Washington’s birthday, one of eleven permanent holidays established by the US Congress, is celebrated annually on the third Monday of each February. A day of rest is granted to many citizens, and the mood is often cheerful, celebrating the life and legacy of our first president and the man who still graces the front side of the mighty US dollar bill.

New Year, New Market

If December capped a disappointing end to a dreadful year, January sparked the hope for better days ahead in 2023. The first month of the new year saw positive returns for stocks and bonds, flipping the script from 2022, where both risky and safe haven assets fell in tandem and there were precious few places for investors to hide.