De-risking Client Portfolios – August 1, 2019

answering questions
Prior to the Fed’s announcement on July 31, 2019, we reviewed most of our portfolios and we de-risked many positions and accounts. Despite the fact that I generally believe that it is very difficult to time the market, we have decided to take this approach due to a confluence of events that we see.

First, we are experiencing a domestic stock market that is up 20% year to date, as measured by the Standard and Poor’s 500 Index. That is a remarkable run in such a short period of time.
Coupled with that are the macroeconomic headwinds, such as the fact that GDP is coming in at a soft 2%, primarily due to decreased business spending (despite the strong consumer spending). Exports are decreasing and trade uncertainty continues to weigh on the economy. Indeed, the NY Federal Reserve has placed a 33% prediction for a recession in 2020, which is the highest probability they have had in years and is widely considered to be a reliable indicator.
If we were faced with either item above, we would probably maintain our generally bullish stance. But, we believe that pairing such a strong recent run-up with such economic uncertainty portends volatility and a potential pull back in the short term.
We have been reaching out to many of you and in many instances, trades have been placed as we believed that time was of the essence. We are happy to discuss your individual circumstances at any time, so feel free to email us or call the office. In the meantime, we will continue to look for opportunities that make sense for you on a risk adjusted basis.
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