Weekly Client Letter

Wall Street often advises staying invested, warning that missing the market’s 10 Best Days can significantly reduce your returns. As a tactical risk manager, we would argue, “Yes, but missing the 10 Worst Days increases your returns to 15.70%!” Achieving that may be unrealistic but consider missing BOTH the 10 Worst AND the 10 Best […]

Despite recent good earnings reports, the S&P 500 has declined below its 50-Day Moving Average level, signaling technical weakness in the market. This divergence between earnings performance and market trends can create opportunities, but also risks. The market may be signaling broader economic concerns or shifts in investor confidence. As always, we are prepared to

The Bloomberg U.S. Aggregate Bond Index, known for its stability and consistency, has seen an unusual uptick in volatility. Before 2020, the Index only had three negative calendar years since its inception. Recently the frequency of negative returns has increased significantly. In fact, the Index is on track to notch its third negative year in

Following a higher-than-expected consumer price index report last Wednesday, the Federal Reserve may reconsider anticipated rate cuts, potentially maintaining higher interest rates for longer than previously expected. This scenario could put pressure on stock market valuations and bond prices. Since the future market direction is unpredictable, we are prepared for any scenario. Our RiskFirst® approach

Stock prices and Federal Reserve interest rate cut expectations were moving together until recently. Now there is a divergence due to a change, in that market participants believe the Federal Reserve might postpone or slow the pace of interest rate reductions, but the stock market has continued up. The question for many is whether the

“Yield-Curve Inversion,” occurs when short-term bond yields surpass those of long-term bonds. This unusual pattern, exceeding over 630 days, marks the longest period of inversion since 1970, highlighting investor concerns about the near-term economic prospects. Historically, these inversions have often preceded economic recessions, though they are not foolproof indicators. At Redwood, we are vigilantly monitoring

In recent times, the surge in market performance has sparked a familiar wave of FOMO-fear of missing out-among investors, compelling many to rethink their strategies in pursuit of higher gains. Historical patterns reveal a tendency for households to shift significantly towards equity securities during these bullish phases, often driven by the allure of immediate returns.

Stretched Valuations Warrant Caution Price / Earnings of the S&P 500 Index has not been this stretched pre-pandemic in over 20 years. Dividend Yields are also at secular lows. These traditional measures of valuation indicate that caution is warranted. Watch our Intro Video! Learn a better way to invest:

Cash Returns Almost as Much as Bonds Over Decade Investors have been better off staying in T-Bills for the past one, three, and five-year periods. Most of the underperformance began in 2022 when the Federal Reserve began aggressive rate increases. This dramatic reality in public fixed-income is why we have made the adaptations in our

In finance, the “Moving Day Average” averages the prices of a security over a certain number of days (like 10, 50, or most commonly, 200 days) and this helps people see the overall trend of the market. Yet the market, namely the S&P 500 Index, has seen a significant uptick recently, climbing notably above its