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1Q 2021 Commentary: Throw the Confetti

March 2021

At the end of the quarter, investors enjoyed the robust returns of riskier asset classes and policymakers’ continued commitment to extraordinary accommodation.

COTW: IPOs Have Left Many Speechless This Year

COTW 20.12.14

Airbnb CEO and Co-Founder, Brian Chesky, was left speechless on Bloomberg TV last week after hearing the opening price of his company’s IPO for the first time. It was a reaction shared by many investors this year when observing the performance of IPOs.

COTW: Small Cap Stocks Playing Catch-up

COTW 20.11.30

While small cap stocks (as measured by the Russell 2000 Index) have lagged large cap stocks (as measured by the S&P 500 Index) year to date, the gap narrowed in November after small cap outperformed large cap by 9.3% (as of November 29). 

COTW: Here We Go Again

COTW 20.11.23

Reminiscent of late 2017-early 2018, risk assets are rallying into year end and bitcoin is leading the charge as it nears its December 17, 2017 high of $19,041.

3Q, 2020 Asset Class Return Quilts

3Q 2020 Asset Class Return Quilts

Gold and Taxable Bonds remained the best performing asset classes year to date. U.S. Large Cap Stocks continued to rally from the March 23 bear market lows, while U.S. Small Cap stocks lagged.

2Q, 2020 Asset Class Return Quilts

2Q 2020 Asset Class Return Quilts 1

Gold and Taxable bonds remained on top, adding to their Q1 performance. U.S. Large Cap Stocks rallied 17.4% in Q2, narrowing the year-to-date loss to 2.8%.

1Q, 2020 Asset Class Return Quilts

1Q 2020 SpringTide Asset Class Return Quilts

Gold, Taxable Bonds, and Cash finished the quarter on top and were the only asset class to post positive gains. U.S. Large Cap Stocks fell 20.2% in Q1, 2020.

COTW: Venture Capital Washout

COTW 20.03.16

According to data from Bloomberg, Venture Capital activity is down 22% since the start of the year. However, that activity had already slowed dramatically prior to the COVID-19 crisis intensifying as the index reached an all time high in June of 2019 and is now d own 52%

COTW: Travel to Hong Kong Has Come to a Halt

COTW 20.02.18

As official estimates of the number of new coronavirus cases each day slows, hopeful eyes are watching for improvement in the news coming out of Mainland China as well as those countries most impacted by restrictions on travel and trade related to the virus…

COTW: How Your Starting Point Impacts Forward Returns

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Fidelity’s recent audit of its 30 million retirement accounts revealed that nearly 40% of its clients were over-allocated to equities relative to what would be recommended by most advisors for their current phase of life.

COTW: QE or not QE?

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After announcing the U.S. Federal Reserve would again start buying up large quantities of Treasury securities, Fed chair Jerome Powell clarified what was really happening during the post-announcement Q&A session: “This is not QE. In no sense is this QE.”

COTW: Headed for a Global Earnings Recession?

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Are we headed for a global earnings recession? Overlaying the year-over-year percentage change in Singapore Electronics Exports with earnings per share growth for the MSCI World Index, a widely used proxy for world stocks, suggests we may very well be. Exports of electronic goods from Singapore dropped 25.9% in August, largely as a result of Trade War related issues.

COTW: Convergence of Active and Passive U.S. Equity Funds

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Morningstar recently published their April Fund Flows report. Per the report: “at the end of April passive U.S. equity fund assets essentially reached parity with active U.S. equity funds at $4.3 trillion each”. Contrast that with the balance back in 1998 when there were 6.5 times as many assets in actively managed U.S. stock funds as in index funds.

COTW: Equity Returns from Cycle Lows in Unemployment

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The U.S. unemployment rate (U3) increased to 4% in January after hitting an almost 50-year low of 3.7% in September 2018 and again in November 2018.  The unemployment rate has now increased for two straight months.

COTW: Gold! What is it Good For?

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Gold is one of the most polarizing investments we know of, which is one of the reasons we started giving it a serious look at the end of 2017.

COTW: The Best Year for Cash in at Least Two Decades

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After nearly nine years of short-term interest rates held near zero, the normalization of monetary policy that began in late 2015 and continued in earnest in 2018, finally caught up with capital markets and exposed how competitive the risk/reward tradeoff of cash – that safe, boring proxy for patience – had become.

COTW: The Powell Put

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The “Fed put” is a term that describes the view held by many market participants that the Fed is generally willing and able to adjust monetary policy in a way that is bullish for stocks.

COTW: Central Banks No Longer Supporting Markets

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We have long contended that asset purchases by central banks contributed – directly or indirectly – to gains in global stock markets (represented here by the MSCI All Country World Index).

COTW: No Revenue, No Problem

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There is no hard-and-fast rule, but “story stocks” are generally defined as those trading at prices substantially out of line with current fundamentals (revenue, earnings, cash flow, etc.) as a result of a positive story that suggests larger profits down the road.

WindRock Roundtable: What’s Next in 2018?

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In December we participated in a roundtable discussion with Rick Rule, John Mauldin and Chris Casey that was hosted by Brett Rentmeester of WindRock Wealth Management. With WindRock’s permission we are sharing the conversation in its entirety. The topics covered included the dollar, emerging markets, Treasury supply, North Korea and cryptocurrencies.  We think many of the comments are as relevant today as they were several weeks ago.

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