Quarterly Report – 4th Quarter 2023 and 2024 Outlook

The year concluded in extraordinary fashion with nine consecutive weeks of positive returns for the Morningstar U.S. Markets index, returning 26.4% for the year and 12.1% for the fourth quarter. The widely reported S&P 500 index was up 24.2% and 11.2% for the respective time periods. As illustrated in the table below, all market caps and investment style (value and growth) benchmarks as measured by Morningstar had double-digit returns for the year. U.S. bond benchmarks returned mid-single digits for the year. Several megacap technology stocks dubbed “The Magnificent 7,” which included Apple, Amazon, Alphabet, Meta Platforms, Microsoft, NVIDA, and …

Quarterly Report – 3rd Quarter 2023

A year ago in August, Federal Reserve Chairman Jerome Powell gave his infamous “some pain might be required” speech that started the aggressive short-term interest rate hikes to help subdue inflation. The third quarter behaved eerily similar to last year’s quarter, but now the “pain” might last longer than anticipated by investors. Being up in the month of July, the market then finished down for the quarter as investors digested that the good economic data points would likely help reinforce the Fed’s resolve to keep interest rates higher for longer. This is where the good news …

Quarterly Report – 2nd Quarter 2023

For the past several months, a majority of the market pundits and economists have been anticipating that the United States would enter into a recession, so much so that often it was characterized as the most widely anticipated recession of all time. Nonetheless, the stock market’s invitation (along with Recession’s invitation) to the recession party must have gotten lost in the mail as it continued to be resilient in the first half of 2023, even in the midst of the Federal Reserve’s continued…

Quarterly Report – 1st Quarter 2023

The market started off on better footing than last year’s first quarter, returning 7.40% (Morningstar U.S. Markets index) for the first three months of 2023. The S&P 500 index was up 7.03% over the same time period. Even though this marked the second consecutive quarter of positive performance for the market, there were wide swings throughout the quarter, with nearly half of the first quarter’s return being derived from the last…

2023 Market Outlook

It has been fourteen years since investors have had to experience a market as detrimental to returns as this year. While the returns of the Morningstar U.S. Market index was not down as much as it was in 2008 (when it returned a negative 37.03%), the negative return of 19.43% for 2022 was not down as much as it was in 2008 (when it returned a negative 37.03%), the negative return of 19.43% for 2022 was felt throughout nearly all…

Quarterly Report – 3rd Quarter 2022

This past quarter marked a significant change in monetary policy throughout the world. Over the past decade, easy monetary policies have been implemented by central banks in an attempt to coax economies to a self-sustaining recovery after the Great Recession of 2008. Not only were short-term interest rates lowered to near or below zero but quantitative easing programs were implemented where central banks purchased securities to help keep interest rates low. While the Federal Reserve has….

Quarterly Report – 2nd Quarter 2022

Every February 2nd, weather pundits anxiously wait on Groundhog Day to see whether Punxsutawney Phil will see his shadow or not to proclaim that either winter will continue for six more weeks or spring will arrive early. On July 28, the second quarter GDP estimate will be announced, and in similar fashion, market watchers will be waiting to see if the economy sees its shadow (i.e., shows positive growth for the quarter) or not. If the U.S. economy has…

Quarterly Report – 1st Quarter 2022

Investors faced wide swings in stocks, bonds, and commodity markets around the world during the first quarter of 2022. At its worst levels, the broad U.S. stock market, represented by the Morningstar U.S. Market Index, was down 13.6% from its January 3rd peak but rallied to finish down only 5.33% by the end of the quarter. The S&P 500, which dropped 4.95% during the quarter, suffered its first quarterly decline since the start of the pandemic in 2020.  From an investment-style perspective…

2022 Outlook

In our 2020 review that we published a year ago, we concluded that most people would have classified 2020 as a miserable year, but for investors, it was extraordinary. That conclusion also seems appropriate for 2021, as Covid variants (Delta and Omicron) interrupted our expectations of a return to a more normal environment for the world’s economy, but markets continue to…

Quarterly Report – 3rd Quarter 2021

The S&P 500 and Morningstar US Market Indexes had lackluster returns for the quarter, barely recording positive returns of 0.53% and 0.03%, respectively. The third quarter had the makings of being exceptional up to the end of the first week of September. During July and August, most companies reported strong financial results that significantly beat expectations. Additionally, the…

Quarterly Report – 2nd Quarter 2021

Growth stocks, particularly large cap, returned to favor in the second quarter and narrowed the wide performance gap from the first quarter between the two investment styles: value and growth. The Morningstar US Market Index, which is a broad market index, was up 14.88% for the first half of the year, edging out the S&P 500 index which has returned 14.4% for the first six months. As illustrated in the table below, large cap growth was the preferred place to be during the second quarter, as small cap stocks relatively lagged as the threat of higher interest rates weighted on lofty valuations and more speculative…

Quarterly Report – 1st Quarter 2021

The Rise of the Left Behinds

The first quarter US stock market performance can best be summed up as the “rally of the left behinds.” After years of underperforming the growth sector, the pro-cyclical rally helped elevate the value stocks during the first quarter as growth stocks diverged from value stocks mid-February to finish relatively flat for the quarter. The Morningstar US Market Index was in between the two investment styles, finishing up 6.01% for the quarter (the S&P 500 Index returned 5.77%), while the Morningstar US Value Index was up 12.49% and the Morningstar US Growth Index finished at 0.61%.  Sectors having the most upside during the quarter were…

2021 Outlook

“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness…” 

 As 2020 concluded, most would classify it as a miserable year, but for investors it was extraordinary. When contemplating how to concisely summarize the past year, it seemed Charles Dickens’s introductory sentence of A Tale of Two Cities written nearly 200 years ago aptly fulfilled that task.  The Morningstar US Market Index, a broad representation of the overall equities market, was up 20.90% for the year, this after a strong 2019 when the market was up up 31.22%. With all of the circumstances surrounding 2020, this is a remarkable feat. Nonetheless, broad market indexes mask the vast….

Quarterly Report – 3rd Quarter 2020

Though stocks were broadly lower in September, market indices had a second consecutive quarter of significant gains and are now up for the year. The US Market Index, a broad index that captures 97% of the investable market, returned 9.24% for the 3rd quarter and is now up 5.84% for the year. A remarkable feat given where the market was in March after the self-imposed shutdown of the world economy to battle the COVID-19 pandemic. From an investment style perspective, growth continued to outperform value companies as illustrated in the table below. Though value stocks performed better in September, as we have mentioned in our previous market commentaries, we continue to see… 

Mid-Quarter Update – 3rd Quarter 2020

“It is probable that a press which maintains an intimate touch with the business currents of the nation is likely to be more reliable than it would be if it were a stranger to these influences. After all, the chief business of the American people is business. They are profoundly concerned with buying, selling, investing and prospering in the world.” President Calvin Coolidge in his Presidential address to the American Society of Newspaper Editors on January 17, 1925.  Calvin Coolidge, the 13th President of the United States, was known for being brief with his words and a commonsense, sensible statemen when governing. Those traits seem void in the current environment from both parties as this divided nation heads towards an election this November. But his quote above came to mind as I contemplated…

Quarterly Report – 2nd Quarter 2020

In spite of the devastation caused by the world-wide economic shutdown in the first quarter, the stock market roared back strongly in the second quarter with its best return since 1998. The Morningstar U.S. Markets Index, a broad index that captures 97% of the investable market, returned 21.98% for the 2nd quarter, while remaining slightly down (-3.11%) from where it started at the beginning of the year. The recovery in stocks during the quarter was driven by the perception that the economic downturn caused by the self-inflected shutdown of the world economy to flatten the curve of the COVID-19 pandemic will be relatively brief with the help of the world-wide fiscal and monetary stimulus efforts. Growth stocks continue to…

The Future of Investing is Calling

For the past 20 years, I have worked in the mutual fund industry in various capacities: equity analyst, portfolio manager, and recently, as the President of a mutual fund company. The primary investment trend of one of the funds I co-managed, Buffalo Discovery, was to find innovative companies, those that were disrupting legacy companies in providing what the end markets desired. Often innovative companies develop a product before the end market even knows that it wants it; case-in-point, Steve Jobs’s visionary development of the iPhone.  Since entering the investment industry in 1992, I have…

Founding Letter

For the past two decades, the world economy has seen lagacy companies yielding the market to new innovative companies that have disrupted the status quo.  The disruptors’ overarching characteristic was their ability to recognize a need in the marketplace and implement a creative solution that the legacy companies were unwilling to consider.  Simply put, the disruptors tended to focus on…