1/11/2019 Weekly Update: Bear Market Rally? Be Patient

Weekly Recap                                                                        

S&P 500                +2.92%

10 Year Treasury   +0.57%

Gold                      1.92%

Volatility              -4.18%

 

Weekly Update: Bear Market Rally? Be patient.

Good afternoon and Happy New Year!  We mentioned in our previous note before the new year, that it was likely the Federal Reserve would acknowledge recent market volatility in its related policy statements.  During a roundtable discussion on January 4, attended by the last three Federal Reserve Chairmen, Jerome Powell, Janet Yellen and Ben Bernanke, Powell stated that the Fed intends to be flexible with its balance sheet policy as market conditions warrant.  This statement was interpreted to be marginally accommodative and kick-started a continuous 6%, 6-day rally.  We are up roughly 10% from the Christmas Eve lows, while still down 12% from the late September highs. For visual context a graph of the market trajectory is below.

 

What remains to be seen is if this is a textbook bear market rally, which tend to be swift and of a magnitude of 8-14% on average, or the start of complete recovery to the highs reached in September and a resumption of the long-term bull market that began in 2009.

At Calibrate Wealth we do not alter our portfolio make up based upon intuition of market direction.  Rather we employ a systematic allocation which adjusts to market conditions over time.  We have tested this method through numerous market cycles and are excited about its long-term risk adjusted performance.  Due to recent market volatility and negative price momentum in risk assets our portfolios are positioned conservatively and mostly in high credit quality corporate bonds and US Treasuries.  Should the long-term bull market resume the portfolio will adjust and add marginal risk as conditions warrant.  To this end, we build active and adaptive portfolios built for long-term performance.  We believe it is unreasonable to catch every short-term directional shift, but rather we seek to catch longer term trend dynamics.

 

 

Thanks for reading,

Zach and Dave

Calibrate Wealth
515-371-5316  

https://www.calibratewm.com/blog-01

 

 

Disclosures

All opinions are subject to change without notice. Neither the information provided nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Past performance is no guarantee of future results.  Tax laws are complex and subject to change. Calibrate Wealth LLC, does not provide tax or legal advice and are not “fiduciaries” (under ERISA, the Internal Revenue Code or otherwise) with respect to the services or activities described herein except as otherwise provided in writing by Calibrate Wealth. Individuals are encouraged to consult their tax and legal advisors (a) before establishing a retirement plan or account, and (b) regarding any potential tax, ERISA and related consequences of any investments made under such plan or account.

 

This material does not provide individually tailored investment advice. It has been prepared without

regard to the individual financial circumstances and objectives of persons who receive it. The strategies

and/or investments discussed in this material may not be suitable for all investors. Calibrate Wealth

recommends that investors independently evaluate particular investments and

strategies, and encourages investors to seek the advice of a Financial Advisor. The appropriateness of a

particular investment or strategy will depend on an investor’s individual circumstances and objectives.

Investing in commodities entails significant risks. Commodity prices may be affected by a variety of

factors at any time, including but not limited to, (i) changes in supply and demand relationships, (ii)

governmental programs and policies, (iii) national and international political and economic events, war

and terrorist events, (iv) changes in interest and exchange rates, (v) trading activities in commodities

and related contracts, (vi) pestilence, technological change and weather, and (vii) the price volatility of a commodity. In addition, the commodities markets are subject to temporary distortions or other

disruptions due to various factors, including lack of liquidity, participation of speculators and

government intervention.

 

Foreign currencies may have significant price movements, even within the same day, and any currency

held in an account may lose value against other currencies. Foreign currency exchanges depend on the

relative values of two different currencies and are therefore subject to the risk of fluctuations caused by

a variety of economic and political factors in each of the two relevant countries, as well as global

pressures. These risks include national debt levels, trade deficits and balance of payments, domestic and

foreign interest rates and inflation, global, regional or national political and economic events, monetary

policies of governments and possible government intervention in the currency markets, or other

markets.

   

Weekly Recap                                                                        

S&P 500                +2.92%

10 Year Treasury   +0.57%

Gold                      1.92%

Volatility              -4.18%

 

Weekly Update: Bear Market Rally? Be patient.

Good afternoon and Happy New Year!  We mentioned in our previous note before the new year, that it was likely the Federal Reserve would acknowledge recent market volatility in its related policy statements.  During a roundtable discussion on January 4, attended by the last three Federal Reserve Chairmen, Jerome Powell, Janet Yellen and Ben Bernanke, Powell stated that the Fed intends to be flexible with its balance sheet policy as market conditions warrant.  This statement was interpreted to be marginally accommodative and kick-started a continuous 6%, 6-day rally.  We are up roughly 10% from the Christmas Eve lows, while still down 12% from the late September highs. For visual context a graph of the market trajectory is below.

What remains to be seen is if this is a textbook bear market rally, which tend to be swift and of a magnitude of 8-14% on average, or the start of complete recovery to the highs reached in September and a resumption of the long-term bull market that began in 2009.

At Calibrate Wealth we do not alter our portfolio make up based upon intuition of market direction.  Rather we employ a systematic allocation which adjusts to market conditions over time.  We have tested this method through numerous market cycles and are excited about its long-term risk adjusted performance.  Due to recent market volatility and negative price momentum in risk assets our portfolios are positioned conservatively and mostly in high credit quality corporate bonds and US Treasuries.  Should the long-term bull market resume the portfolio will adjust and add marginal risk as conditions warrant.  To this end, we build active and adaptive portfolios built for long-term performance.  We believe it is unreasonable to catch every short-term directional shift, but rather we seek to catch longer term trend dynamics.

 

 

Thanks for reading,

Zach and Dave

Calibrate Wealth
515-371-5316  

https://www.calibratewm.com/blog-01

 

 

Disclosures

All opinions are subject to change without notice. Neither the information provided nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Past performance is no guarantee of future results.  Tax laws are complex and subject to change. Calibrate Wealth LLC, does not provide tax or legal advice and are not “fiduciaries” (under ERISA, the Internal Revenue Code or otherwise) with respect to the services or activities described herein except as otherwise provided in writing by Calibrate Wealth. Individuals are encouraged to consult their tax and legal advisors (a) before establishing a retirement plan or account, and (b) regarding any potential tax, ERISA and related consequences of any investments made under such plan or account.

 

This material does not provide individually tailored investment advice. It has been prepared without

regard to the individual financial circumstances and objectives of persons who receive it. The strategies

and/or investments discussed in this material may not be suitable for all investors. Calibrate Wealth

recommends that investors independently evaluate particular investments and

strategies, and encourages investors to seek the advice of a Financial Advisor. The appropriateness of a

particular investment or strategy will depend on an investor’s individual circumstances and objectives.

Investing in commodities entails significant risks. Commodity prices may be affected by a variety of

factors at any time, including but not limited to, (i) changes in supply and demand relationships, (ii)

governmental programs and policies, (iii) national and international political and economic events, war

and terrorist events, (iv) changes in interest and exchange rates, (v) trading activities in commodities

and related contracts, (vi) pestilence, technological change and weather, and (vii) the price volatility of a commodity. In addition, the commodities markets are subject to temporary distortions or other

disruptions due to various factors, including lack of liquidity, participation of speculators and

government intervention.

 

Foreign currencies may have significant price movements, even within the same day, and any currency

held in an account may lose value against other currencies. Foreign currency exchanges depend on the

relative values of two different currencies and are therefore subject to the risk of fluctuations caused by

a variety of economic and political factors in each of the two relevant countries, as well as global

pressures. These risks include national debt levels, trade deficits and balance of payments, domestic and

foreign interest rates and inflation, global, regional or national political and economic events, monetary

policies of governments and possible government intervention in the currency markets, or other

markets.