Broker Check

April Newsletter


April 4, 2019


“…I See Sustained Economic Growth. You See A Prolonged Downturn …”

March 2019 marked the tenth anniversary of the current bull market for US stocks, as markets began their recovery from the “crash” of 2008. Over the ten-year period ended March 31, 2019 we saw a miraculous recovery; in 2009 (for the 12-month period ended 3/31/2010, our equity portfolio returned over 68 percent and our aggregate portfolio of equity and income investments returned over 43 percent), followed by eight years of unremarkable total portfolio returns (ranging from 11.6 percent in the twelve-month period ended March 31, 2011 to -4.8 percent in the twelve-month period ended March 31, 2016) reflecting a variety of global economic and political struggles. In 2017, the US stock market shot up on expectations of global expansion in a new era of capitalism, only to fall off near the end of 2018 as expectations may have exceeded real results. In January of this year, our markets began another climb to new heights as corporate earnings returned over-sized results. On March 22, 2019 global markets retreated as fears of global recession resurfaced after Fed Chairman, Jerome Powell, indicated that global economic growth is again showing signs of slowing. Nevertheless, over the ten-year period ended March 31, 2019, our globally diversified portfolio of equities returned 187 percent and our combined portfolio of equities and income investments returned 96 percent.

If you ask investment managers their opinion, half would say we are in a bull market recovery and half would say we are in a bear market rally, as the cartoon illustrates! Regardless, we are positioned to “ride-out” the ups and downs with a balanced portfolio of equities and income investments allocated for a combination of long-term growth and current income. Our aggregate managed portfolio is currently allocated fifty percent to equity investments (across four broad categories) and our income portfolio is currently allocated fifty percent to income investments (allocated equally between the Bond/CD ladder and Alternative Income investments).

As each client’s portfolio reflects individualized Investment Policy Statements, client allocations range from aggressive to defensive, reflecting goals, ages and risk tolerance. In re-balancing all client portfolios to reflect tactical portfolio changes, we have successfully “sold high” and “bought low” as we use the market volatility to our advantage to achieve meaningful long-term results.

As you can see from the range of returns indicated below, our long-term results continue to be impressive, even as some shorter periods are clearly unremarkable:

The one-year and ten-year returns for your individual portfolio are reported in the attached reports. Note:  if your account has been managed for less than ten years your reports reflect the period of actual management.

Of further note, we can report that for the ten-year period, the domestic portfolio of large, mid and small-cap equity positions returned 339 percent; with the five positions owned for the entire ten-year period returning over 300 percent, on average. On the same basis, the international equity portfolio returned 151 percent for the ten-year period, with the six positions owned the entire period returning from 63 percent to 289 percent. Both the Alternative Equity and Global Equity allocations were not owned for the entire ten-year period. For the same ten-year period, the CD/Bond ladder returned 40 percent and the Alternative Income portfolio returned 120 percent.

Our expectations for the foreseeable future are clearly dependent upon global trade war tensions relaxing and central banks managing interest rates in line with broader economic growth patterns. In the meantime, our aggregate managed portfolio has a current indicated cash flow yield from dividends and interest of 4.4 percent. Even if the growth element of the portfolio is put on hold as global economies stabilize, the indicated cash flows and income maturities will satisfy planned-for distributions from client accounts, without the need to sell equities into a down market.

As always, please contact either James or me if you have any questions.


Intelligent Investment Management, LLP

Stephen Wheeldon, CFP®