Broker Check

March Newsletter




March 2, 2021


“…All Expanded to Uncharted Territory.”


As we begin to turn the corner on winter and head into spring, the broad market indices reached new record highs. Last Wednesday the broad market indices shot higher based on reassuring statements made by Federal Reserve Chairman Jerome Powell; with indications that the Central Bank does not plan to raise interest rates for the foreseeable future. Even with the dramatic March 2020 pandemic market collapse, for the twelve-month period ended February 28, 2021 the domestic equity portion of the aggregate managed portfolio increased in value nearly forty-one percent and the total equity side of the portfolio rose in value over twenty-five percent. The total return (growth and income) of the portfolio, weighted roughly 50 percent equities and 50 percent income investments, has risen  over fifteen percent for that same one-year period.   Steve and I are reviewing client portfolios; harvesting gains, then redistributing those gains to alternative equity positions that provide cash flow and inflation protection and adding to alternative income positions that contribute to cash flows.  This is the “sell high” and “put-the-gains-in-the-bank” move of our long-term successful investment strategy, meeting clients’ long-term financial goals.

While unemployment remains higher than it was before the pandemic, the anticipation that the economy will heat up later this year has caused bond yields, seen as a benchmark for interest rate movements, to spike.  As the U.S. continues to move through the pandemic with success, economists are predicting Americans will begin to spend on big-ticket items such as vacations and weddings, while companies get back to hiring new employees. The most optimistic investors believe the economy will bounce back and move even higher beyond today’s uncharted territory.

 This most recent rally shows that investors believe the “fun” is just getting started with a combination of more fiscal stimulus, extensive Covid-19 vaccinations and pent-up demand for consumption.  All this and a “kick” from near record-low interest rates, will push economic growth forward.  Never-the-less, investor caution was felt in volatile trading last week with

thoughts that a surge of economic activity later this year may cause prices and inflation to spike, pushing central banks like the Fed to roll back some of their support for the economy sooner than expected. A sell-off of high growth stocks that have been popular during the pandemic occurred at times over this past week as profits were taken and money began moving back into interest sensitive categories.

 More good news:  nursing home residents have been among the first people to be vaccinated, and it appears Covid-19 patterns are changing as nursing home deaths have plummeted, with the weekly incident rate falling nearly 90 percent from early December rates. It is a good example of how “the vaccine” is changing the landscape and protecting people.  Additionally, Johnson & Johnson’s single-dose Covid-19 vaccine was approved for use in the US.  It requires only one shot making it easy to administer.  These news items have resulted in equity markets rising higher; even as values continue to exceed historically fundamental levels.

Over the years I have had clients inquire about Environmental, Social, and Corporate Governance (ESG) investing.  ESG investing refers to ethical business practices of measuring the sustainability and societal impact of these practices and investment in a company or business.  I am happy to report that our largest holding in the portfolio, BlackRock Global Allocation Fund has been recognized for making investments in businesses that have adopted ESG best ethical practices.  Moving in the same direction, the majority of our equity fund managers are making investment decisions based on the same guidelines.  While we continue to manage our client portfolios in a diversified manner with a focus on long-term risk adjusted returns, it is important to be informed on the evolving nature of companies that are making ethical business decisions.  It is our expectation that over time more and more companies will adopt such practices to remain competitive and attractive as long-term investments.  I will be participating in a four-part training series in March that covers various elements of ESG investing to further analyze if and how this may enhance our investment strategy.

I am happy to discuss the aspects of our portfolio management that is influenced by ESG investing.  Also, we are always available to help you or any of your friends and family that could benefit from our style of investing. Please call our office anytime.

Stay healthy and safe,

Intelligent Investment Management, LLP