Category Archives: Retirement Planning

Have you ever had some type of team that you follow, could be sports related or the other, that has a pretty good record, seems to be doing well on the surface, but when you look a little closer it becomes apparent that this team is dominated by the performance of just a very few individuals?

Participation or lack there of

There are a lot of similarities in the above analysis to the current capital market environment. Just like the vulnerability of your favorite team, should some of those dominant forces not perform well or heaven’s, even worse, get injured, the real truth will begin to reveal itself.

Capital markets that are thinly led can have distinct vulnerabilities. On a positive side many of the players can catch up to give greater participation. An optimistic outcome. On the negative side just like our team, should some of those more important subjects falter, reality may sink in.

Interest Rates

As mentioned in our Q4 Newsletter, higher interest rates are the tone of the times currently. Our lead article talks about the tremendous positives that higher interest rates have on pensions in the form of higher fixed income earnings. In the very short term, it is a headwind for fixed instruments, but over the long term safer, steadier, and more normalized expected returns.

Political Season Already

While it only seems like yesterday when we had a presidential election, it is hard to believe that next year, approximately this time of the year, we will have another. Recall, there will be many headlines associated with the political process, many of them possibly frightening. You know that we are careful to comment on headlines and things that have not become law, but nevertheless the frightening headlines may appear. Just remember there is a difference between a desire, speaking, debating, and a law.

Positive Seasonality Headwinds

Looking forward to the final quarter of the year, just as it gets cooler in most parts north of the equator, capital markets tend to have positive historical reference. While we are always careful to say this time is different, the Federal Reserve, if resolute in their desire, have both feet firmly pressed on the economic brakes, and as of yet have not been successful in achieving their goals.

Sincerely,

John A. Kvale CFA, CFP

Enclosure (2023 Report)

Dear Investor:

As we say goodbye to the end of the second quarter, the middle of the year is currently right before us, and remarkably interesting cross currents abound.

“It was the best of times; It was the worst of times.”

The Charles Dickens old favorite seems like a good quote given the cross currents at our mid-year review and more importantly forward-looking possibilities.

It is no secret that interest rates have risen dramatically, actually on a percentage basis fastest ever, quoting our Q3 2023 Newsletter and main lead article. What is most interesting is the continued stamina of the US economy given the FOMC (Federal Open Market Committee) chaired by Jerome Powell gigantic attempt to slow the US economy in bludgeon hammer like format, with the afore mentioned higher interest rates.

In true what is old is new again “Higher interest rates for longer” again a terrific article in our Q3 Newsletter.  What was once a necessary evil of stability, (fixed income/bonds), is possibly the most pleasurable fixture in our investment house. Now that the preponderance of interest rates hikes is likely far behind us, the hard work is done, and the reward of higher income with lower volatility is looking forward!

Partying like it’s 1999

The vast majority of stocks are adhering to Powell’s desires and at best treading water, at worst admitting defeat. Similar to the dot com (.com) times of 1999, Artificial Intelligence aka AI is the sexy theme of the moment and has put jet fuel on a small handful of company stocks.

Just like lightning, markets rarely tend to repeat, but they do rhyme, and while our hope is that this is not the.com 1999 party, our radar is certainly up.

Referring to our Q3 Newsletter one more time, there seems to be stimulus, just like the candy for the kids at the pool, that has not worked its way through the system. We continue to find more evidence of this and call your attention to the “Slower for longer Article” again in our newsletter.

While cautiously optimistic, we are happy not to be swinging for the fences investors and look forward to how this economic book is finally written!  Time will tell and is our Friend.

Thank you for your time talk to you in the fall,

Sincerely,

John A. Kvale CFA, CFP

Enclosure (2023 Report)

Dear Investor:

Putting Q1 of the year (2023) behind us, compared to last year at this time, seemed straight forward. recall last year at this time, we had just began interest rate hikes.

As the calendar turned we began searching for a similar series to last years’ “Back to Basics”, due to the popularity, comments, and sharing that occurred with this multiple series.

By luck or accident, we landed upon the antithesis like series called “Advanced Analysis” in part due to the current economic cycle and the nearing of the end.

Advanced Analysis Pilot

Our Pilot/Part 1 of the series was extremely timely and focused around M2 a broad economic measurement of money sloshing around the financial system. This is discussed in greater detail in our Q2 Newsletter at a very high level. Whether lucky, or preeminent, our observation, was to watch out for more high risk debt players in the capital markets and especially junk bonds. This fact seems to be occurring much faster than originally though.

Tax Season – Hints and Reminders

As we turn to Q2 of the year in what seems like expeditious fashion, it is tax season.  We once again call your attention to our Q2 Newsletter as there are some great last minute tips not only looking forward to this year, but also things available that may help last year’s taxes.

Interest Rate Anniversary – Most Likely Nearing an End

As mentioned in the intro, within the last two weeks we have just passed the start of the interest rate cycle, which was the fastest on a percentage basis we have ever seen The US economy and the global economy for that matter, operate much more like an aircraft carrier then a ski boat in their change of direction. The financial sector seems to be in the early innings with other parts of the economy much later in the economic game cycle. We will get through the slowdown eventually with all parts of the economy and move forward.

Have a great spring. Talk to you in the summer!

Sincerely,

John A. Kvale CFA, CFP

Enclosure (2023 Report)