Happy Spring Everyone!
The weather and capital markets have kept us guessing on what’s coming next. While we know we can’t control the weather, we can control risk management. I thought now would be a good time to update you on our current outlook at Katahdin Financial.
After the worst December since the Great Depression, we have just closed the books on one of the best 1st quarters in the last 30 years. Looking ahead, near-term volatility would be a natural occurrence after such a strong consolidated upside run. The US stock market has posted positive gains for the entire year 9 out of the last 10 times that S&P 500 was up over 10% in the first quarter. We continue with a cautiously optimistic outlook and want to make sure we have liquidity and a lean towards balance in the portfolios.
Recession concerns have mellowed due to solid labor market data and short-term momentum in the S&P 500. We are slightly off our all-time highs of last September in the equity market and that tops our focus in group discussions at Katahdin Financial. As earnings season kicks off, the expectation is to anticipate a drop in year-over-year profit growth and a continued slowdown in overall global growth data. These are typical occurrences during the late stage recovery period of the economic cycle. Trade tensions, primarily with China, will continue to be a headline story through 2019, as well as political stress in Europe.
Our approach to the ‘financial noise’ is to continue to trim back more aggressive growth names and add global dividend paying companies that are committed to increasing predictable income. On the bond side of the allocation, we are removing some credit risk assets and adding higher quality strategies now that the Federal Reserve looks to be close to finishing their multiyear interest rate hike policy.
As always, we will be highly communicative during any bouts of volatility and please reach out with questions or concerns anytime. Click below for an article from our partners at Alliance Bernstein that outlines what to look out for in the months ahead.
Alliance Bernstein - Watch Out For Volatility, Even in Rising Markets
-Katahdin Financial Group Team
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