Our Approach

INVESTMENT PHILOSOPHY

The marketplace can be difficult to navigate. Anyone who has lived through the tech wreck in 2001 or the 2008 financial crisis knows that the ride can be bumpy along the way.

We developed a principled investment philosophy that guides our decisions to mitigate the risk of losses in the short-term, while producing competitive returns over the long-term. We identified three primary indicators: Momentum, Economic Fundamentals and Market Valuation. These indicators work in tandem to provide a heartbeat for the market.

Our investment philosophy is known as the Three Dials.

THREE DIALS

Momentum/Sentiment

Current Reading

Positive

Equity markets continue to prove resilient in the face of a global pandemic, social unrest and political uncertainty. In fact, optimism over the short-term direction for stocks reached an 11-week high at the end of August, according to the AAII Investor Sentiment Survey. As markets march higher, our Momentum Dial remains in a “Positive” position.

Economic Fundamentals

Current Reading

Negative

Despite the bullish sentiment around the stock market, opinions regarding the underlying economy continue to languish. Small business optimism fell according to the NFIB’s most recent index reading, while consumer confidence has yet to budge from the depressed post-COVID levels according to the University of Michigan. With upwards of a million new Americans filing for unemployment each week, we’ve yet to see enough from the economic rebound to alter our Economic Dial’s “Negative” reading.

Market Valuation

Current Reading

Negative

As equity prices have risen in the face of falling economic output, Warren Buffet’s famed Market Cap to GDP ratio has risen to its highest level going back to the indicator’s inception of 1970. As lofty stock valuations tend to correlate with below-average returns, our Valuation Dial remains in a “Negative” position through the end of August. On balance, our Three Dials composite reading has us slightly underweight risk assets heading into the last month of Q3. We continue to monitor this ever-changing environment for our clients and will communicate any updates on a timely basis.

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