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Weekend Reading

by Fortem Financial October 1, 2022

Stocks And Bonds On Pace For 3rd Consecutive Negative Quarter

Of the 187 quarters since 1976, there has never been a period that has seen negative quarterly returns for both stocks and bonds three quarters in a row. Should the S&P 500 close below 3,785 today, this will occur. Negative returns for both stocks and bonds are more often than not associated with recessions which are looking more and more likely these days.

Quarters With Both Negative Returns for Stocks and Bonds

S&P 500 Sees Its Most Volatile Half Since 2009

My colleague, Todd Sohn, passed this data along showing that during the first nine months of the year, 88% of trading days had an intraday range greater than 1%. This is the highest level since 2009 when 95% of the trading days saw ranges greater than 1%. We see no reason for volatility to subside in the fourth quarter.

% of Days with S&P 500 Range > 1% January - September By Year, Since 1982

Active Managers Are Having A Strong Year

With the S&P 500 down -22.7% since the beginning of the year, active managers are having their best year since 2007 with 57% outperforming and the average fund declining -21.6%. These data are focused on large cap core managers and it is a welcome sign for an industry that had a challenging time thanks to easy monetary policy. The extent to which that is changing may create a better environment for stock selection as the cost of capital increases.

Annual S&P 500 Performance vs. % of Active Managers Outperforming (Sorted by Annual S&P Performance High to Low)

A Reminder That Market Timing Is Incredibly Difficult

Although it’s easier said than done, ignoring the day-to-day gyrations in the market and headlines for rationalizations of sell-offs is often the best strategy. We would all love to time the market, miss the worst days, and be fully invested only on the best days, but it is impossible. As the chart below shows, missing just the five best days over the last 25 years would result in annualized returns 1.8% less than being fully invested.

S&P 500 Compound Annual Growth Rate January 1, 1995 - September 29, 2022)

Source: Strategas

Sincerely,

Fortem Financial
(760) 206-8500
team@fortemfin.com

 

Brian Amidei, along with Partners Joseph Romano and Brett D'Orlando have also been named *2014, 2015, 2016, 2017, 2018 Five Star Wealth Managers!

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Awards and recognitions by unaffiliated rating services, companies, and/or publications should not be construed by a client or prospective client as a guarantee that he/she will experience a certain level of results if Fortem is engaged, or continues to be engaged, to provide investment advisory services; nor should they be construed as a current or past endorsement of Fortem or its representatives by any of its clients. Rankings published by magazines and others are generally based on information prepared and/or submitted by the recognized advisor. Awards may not be indicative of one client’s experience or of the Firm’s future performance. Neither Fortem nor the recognized advisor has paid a fee for inclusion on a list, nor purchased any additional material from the award provider. The criteria for each award is listed below:

Five Star Professional Disclosure:
The Five Star Wealth Manager award is based on 10 eligibility and evaluation criteria: 1) Credentialed as an investment advisory representative (IAR) or a registered investment advisor; 2) Actively employed as a credentialed professional in the financial services industry for a minimum of five years; 3) Favorable regulatory and complaint history review; 4) Fulfilled their firm review based on internal firm standards; 5) Accepting new clients; 6) One-year client retention rate; 7) Five-year client retention rate; 8) Non-institutionalized discretionary and/or non-discretionary client assets administered; 9) Number of client households served; and 10) Educational and professional designations. The inclusion of a wealth manager on the Five Star Wealth Manager list should not be construed as an endorsement of the wealth manager by Five Star Professional or the magazine. The award methodology does not evaluate the quality of services provided. Additional information about this award is available at: fivestarprofessional.com/2016FiveStarWealthManagerMethodology.pdf
Fortem Financial 2016. All rights reserved.

Data Sources: News items are based on reports from multiple commonly available international news sources (i.e. wire services) and are independently verified when necessary with secondary sources such as government agencies, corporate press releases, or trade organizations. Market Data: Based on reported data in WSJ Market Data Center (indexes); U.S. Treasury (Treasury Yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness.

Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. The opinions expressed are solely those of the author, and do not represent those of Fortem Financial, LLC or any of its affiliates. Past performance is no guarantee of future results. All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful. Forward looking statements are based on current expectations and assumptions, the economy, and future conditions. As such, forward-looking statements are subject to inherent uncertainty, risks, and changes in circumstance that are difficult to predict. Actual results may differ materially from the anticipated outcomes. Carefully consider investment objectives, risk factors and charges and expenses before investing. Fortem Financial is a registered investment adviser with the SEC. Advisory services are offered through Fortem Financial.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighed index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indices listed are unmanaged and are not available for direct investment.

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