Weekly Commentary, April 28,2023 Capital Markets, Economy.

#financialplanning #wealthmanagement #investmentmangement #retirementplanning #insuranceadvisor

Economy:

Many companies have started releasing earnings reports over the past few weeks, as it is that time of the year when 1st quarter results are announced.Some sectors have picked up well, and started recovering the losses from last year.

Banking sector earnings reports were generally positive, alleviating the concerns of skittish investors.They generally reported higher interest income and healthy results.However, the worst may not be over yet, as some bank stock prices are indicative of the sectors troubles. Many regional and smaller banks have their assets and balance sheets under a microscope, as worried investors want to ensure that their money is safe. There is been capital flight from many saving deposits accounts at the regional and small to mid size banks.

Capital Markets:

The stock market sectors have performed relatively well during past few weeks. This week has been no different with many sectors recovering. Even though the overall economy has been sending mixed signals about a possible recession with a hard landing, investors seem to be regaining the confidence. This weeks performance is another reason to be thinking about the long term, instead of worrying about timing the markets. Combined with dollar cost averaging, it is weeks like this that help the long term investors that plan ahead.

The bond market yields are at an all time high, for a generation of investors. They have not been this high in the past two decades. The yield curve remains inverted indicating the nervousness of investors over the short term. After a record loss in 2022, bonds are off to a better start in 2023. Bond fund inflows have been robust since the beginning of 2023. Federal Reserve seems to be still hawkish regarding interest rates, as the priority seems to be to tame the run away inflation that is still prevalent in the markets and economy.

Real Estate sector has posted recovery in this quarter. However this is a generalization for the combined commercial and residential assets. Real estate is hyper regional and varies across different types of properties. Single Family new home construction starts have been slow as builders are still worried about the pricing pressure. Some regions of the country are doing well compared to others when it comes to Single family home sales.

Hypothetical Model, Accumulation from 2008-2023.

The weekly results were mixed. Long term compounded results combined with dollar cost averaging have been extremely high. It is in the smaller details of rebalancing, re allocation of new capital flows that will produce dramatic results over long time intervals. The smaller decisions in shorter time intervals will lead to bigger nest egg differences over longer time intervals, when conflicts of interests, brokerage commissions, advisor fees, advisor conflicts are optimized for best interests of the client.

Insights:

For the near term, it is better to be cautious and go into defensive sectors and stable bonds due to the fear and uncertainty present in the market. It is futile to time the market for an average investor, as the opportunity of growth and benefits of dollar cost averaging are lost in the quest for timing the bottom of the market. Considering the economic climate, a conservative outlook for the near future, combined with a method to tilt the new capital into aggressive sectors, if the economy and the capital market environment turn brighter, will serve the long term investor well.

Contact:

Raghu Kumar Komari, CPM?, Candidate for CFP? Certification

[email protected]

www.iriswealthadvisory.com

Disclosures/Disclaimers:

The commentary is provided for educational purpose only. It shall not be considered as Investment Advise or Financial Planning Advise or a recommendation of specific funds. A presentation is also shared with citations and more details on the analysis and methods used. Please do your due diligence.