Weekly Client Letter – May 20, 2024

Historical patterns show that peaks in household equity exposure have preceded long periods of muted market performance. These stretches of stagnant returns can be seen in the chart below highlighted in rectangles, right after the circles indicating the new high level of household equity exposure.

While we can’t predict the future, recognizing these trends can guide us in managing risk and making informed investment decisions, rather than chasing trends.

Peaks and Pauses

Weekly Client Letter - May 20, 2024
Source: Bloomberg, FRED, Redwood. Data as of 5/16/2024. Date ranges from 12/31/1951-12/31/2023
  • We believe the preservation of capital is key to consistent, long-term investment success.
  • Our investment approach is grounded in economic theory and backed by quantitative analysis.
  • Managing drawdown risk is a pillar from which we build our portfolios.

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