By: Matt Garrott
When markets are sharply up or sharply down, attention seems to focus on the one asset class that is doing the best. There is a temptation to abandon the diversified financial plan (which will never beat the best performing asset class, by definition) and load up on what everyone is talking about. Over the last couple of years, the hot topic has been the Magnificent 7 stocks, the largest stocks in the S&P 500. They seemed unstoppable, driving the lion’s share of S&P 500 returns to such an extent that people were asking why buy anything other than American stocks. Or even: why not just buy the Mag 7 or just Nvidia or Tesla? Investing is so easy.
The S&P 500 hit an all-time high earlier in the quarter before plunging 10%. It has recovered a bit, ending the quarter down 4.3%. The Mag 7 stocks ended the quarter down over 15.7% while the other 493 stocks in the index were up 1.2%. A diversified portfolio had a different experience than the S&P 500. Developed international stocks, emerging markets stocks, and bonds were all up for the quarter. Does this mean the media has learned not to chase fad investments? Has CNBC changed its “MARKETS IN TURMOIL” chyron to “DIVERSIFICATION FOR THE LONG-TERM”? Of course not. If anything, we’ll see more headlines on gold being over $3,100/ounce.
This is a good time to take a snapshot of your feelings and reaction to headlines. Is your focus on the long term or short term? Yes, the future is uncertain and markets are volatile, but if we waited until the future was certain or the markets were calm, we’d never invest. The headlines treat the real world as if it’s a soap opera with twists and betrayals and ominous cliffhangers before every commercial break. The truth is life plays out more slowly than the news stream refreshes.
Fairway has been busy outside of the investment markets. We hired a new Associate Wealth Manager, Blake Rudy. Alex Canitano passed the Certified Financial Planner™ certification exam. Fairway advisors have been quoted in the press this quarter, with Brian Tullio making an appearance in USA Today twice. Mark Weiskind was featured on a couple of podcasts discussing how Fairway delivers reliable value and he and Taylor Papiernik gave a presentation on that topic in front of the Cleveland Metropolitan Bar Association as well. If you haven’t already, consider following Fairway on LinkedIn and Facebook, where we regularly post updates about activities and accolades happening within the firm.
Market Commentary Disclosures
Fairway Wealth Management LLC (“Fairway”) is an SEC Registered Investment Adviser. Registration does not imply an endorsement of the firm by securities regulators nor does it indicate that the adviser has attained a particular level of skill or ability.
This post represents the opinions of Fairway as of the date indicated and may contain forward-looking statements, predictions and forecasts. Forward-looking statements necessarily involve risks and uncertainties, and undue reliance should not be placed on them. There can be no assurance that forward-looking statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements. Past performance is no guarantee of future results. Market conditions can vary widely over time and can result in a loss of portfolio value.
This post is prepared using third-party sources. Fairway considers these sources to be reliable; however, it cannot guarantee the accuracy or completeness of the information received. This information is educational and general in nature and is not intended to be, nor should it be construed as specific investment, tax, or legal advice. Charts are provided for the illustrative purpose of general market commentary. No client or prospective client should assume the above information serves as the receipt of, or substitute for, personalized individual advice.
