Weekly Client Letter

The S&P 500 risk premium, which measures the extra earnings stocks offer over safer 10-year Treasury bonds, has turned negative for the first time in over two decades. This means that investors are no longer being compensated in earnings for taking on the additional risk of equities relative to bonds-a signal that valuations in the […]

The S&P 500’s rolling two-year rate of change recently hit the 95th percentile, a historically rare level of growth. While this indicates strong market momentum, history shows that such rapid gains are often followed by a cooling-off period. Exceptions, like the mid-1990s, are rare, and sharp pullbacks are more common once this threshold is reached.

Following election day, markets often experience a short-term rally as investors anticipate changes under the new administration. Historically, however, these gains tend to fade after the inauguration, with a period of cooling off before markets resume their long-term growth path. This volatility underscores the importance of prudent risk management, allowing us to navigate these fluctuations

Historically, the S&P 500 and the S&P 500 Equal Weight have shown strong correlation, basically moving in the same direction at the same time. Recently, however, the correlation between these two has reached the lowest point ever. Indicating smaller stocks beginning to perform differently than larger stocks within the S&P 500. This is why we

In 2024 alone, the S&P 500 Index has notched nearly 50 record high days. This may lead to concerns or questions of how much higher the market has room to run or if it’s close to overheating. However, the current price-to-earnings (P/E) ratio shows that stocks are trading at a 19% discount compared to earlier

As elections approach, media noise and investor anxiety often rise, but historical data shows that market volatility in election years is nearly identical to non-election years. Markets tend to focus on fundamentals like interest rates, earnings, and inflation rather than political events. Elections may generate headlines, but they rarely have lasting impacts on overall market

Whereas the first half of the year’s market performance was narrowly dominated by the S&P 500, since the end of the second quarter, a broader-based performance has taken hold with smaller stocks outperforming the S&P 500 so far. This is why we maintain a diversified portfolio and don’t want to chase historical performance; we continue

The relationship between job openings and the stock market has historically been strong, with both moving in tandem as indicators of economic health. However, recent data show a notable divergence—job openings have been falling while the S&P 500 continues to climb. This suggests that while economic fundamentals may be softening, the stock market is behaving

Over the past year, we’ve seen a significant drop in mortgage rates, which historically has acted as a positive catalyst for stocks. When the average 30-year fixed mortgage rate declines by more than 100 basis points in a 12-month period, the S&P 500 on average returned over 12%. This relationship highlights how easing borrowing costs

When interest rates drop, existing bonds become more valuable because they pay a higher rate than new bonds. Recently, the expectation of rate cuts boosted the performance of the Bloomberg U.S. Aggregate Bond Index (AGG), benefiting many bond portfolios. Given this movement in bonds that has already occurred, the best gains from Fed rate cuts