I’ll dive right in by saying – this is not going to be a “stay the course” email.
With that said, I generally think reactionary investing is prone to poor results over time. Additionally, you should know that, if you are already a client of East Franklin Capital, your overall asset allocation assumes – from time to time – some significant market movement and we are invested in a way that, while volatile, will generally not be as volatile as the stock market. Lastly, while in the coming days/weeks you will likely see some activity in your account, it is mostly taking opportunities where we can still within the boundaries of our existing asset allocation but very little that rises to the level of an outright change of course.
In short, and in general… we are staying the course. Wait, you might be asking yourself, I thought Matt opened with “this is not going to be a stay the course email”? And, in fact I did! However, the difference is that, while we are staying the course generally, we are doing so through the lens of vigilance with regard to understanding where opportunities may be now or may be in the near future… and willing to make some adjustments along the way. Still on the agreed upon course in general but adjusting as we go.
One example of an adjustment might be more exposure to certain industries or sectors over another – still invested in the markets (stocks and fixed income) but thinking about what industries or even companies have been unduly punished by the broad swathe drop in the market or which companies or industries are positioned to do well given the near-term policy shifts and economic headwinds. No wholesale changes, but adjustments within our existing asset allocation framework.
I will not pretend to know when the “bottom” of this market movement will be or if we have “turned a corner” but you can be certain that we will aggregate information from many research firms, investment companies, economists, etc. (the beauty of our independence as an investment advisory firm) and stay focused on our long-term goals but be nimble enough to make shifts where necessary. Most economists and investment experts believe the position taken initially with regard to tariffs (certainly those related to our long-time allies) will give way to a negotiated – more practical – compromise of tariffs and trade agreements. However, markets can be reactionary and often times move beyond what is a reasonable reaction (both up and down). We are going to stay aware and agile but if history is our guide – and we maintain a long-term viewpoint – this near term noise will pass eventually, and we will continue to benefit from our long-term investments.
While few of you are likely to be fans of the sport of Cricket (I am included in the “not a fan” category by the way) there is an expression that I have recently learned from an individual of wisdom and perspective who does follow the sport that I think fits our viewpoint quite well: “stay to the wicket and the runs will come”. That is what we will (continue) to do.
