Editors Note: The following article was recently sent to Alphavest clients. It is being published here to help you better understand our current financial environment. —Cokie

The Berkshire Hathaway annual meeting kicked off last Friday and this was one of the sound bites that is worth discussing; 

“Buffett compares Wall Street to gamblers, would trust ‘monkeys’ over financial advisers….” Further, Warren Buffett said he’d bet on monkeys with darts over financial advisers. 

Press pause —so I can add some current market context before I respond to this….
U.S. stocks sunk last Friday with the Nasdaq Composite notching its worst month since 2008, down -13.3% in April and fell nearly 4.2% weighed down by Amazon’s post-earnings plunge. The S&P 500 retreated by 3.6% on Friday and was down 8.8% in April and the Dow Jones Industrial Average shed 939.18 points, or close to -2.8%, off -4.9% for the month.

We enjoyed a rally to almost erase Friday’s sell-off on Wednesday, and today we find a markets in somewhat of a more dramatic sell-off than last Friday, off, on average -3% to -5% with our overall portfolio down approximately -2%, by comparison. This type of yo-yo sell-off on the NASDAQ hasn’t happened since Q1 2020 during the COVID market woes, and before that, 2008 the last true bear market we’ve seen and where the economy slid into a protracted financial recession.

Now, to address the monkey comment. 

I DON’T —that’s right, I DO NOT disagree.  

I AGREE with the Oracle of Omaha and have for some time. In fact, it is those sentiments that represent the foundation of the 4 core professional pillars/principals that I am fiercely committed to; low fees, active management that outperforms, no conflicts of interest and a clean U4–no inquiries/spotless industry background checks free of client dissatisfaction/complaints.

Since Mr. Buffett was so bold, I’m going to follow suit—at the risk of a similar grand-sweeping generalization. Here it is:

Financial Advisors—-especially the “buy and hold” and the 60-40 advisor are LAZY and not worth the fees they charge. I AGREE.

Tactical, advisors, ones that dynamically/actively manage assets based on not only the client’s risk profile (the only thing the lazy “guy”—sorry, boys—looks at) but also look to the market environment for optimal risk-adjusted client returns MIGHT be worth the fees and a step above a monkey (this is me).

You know where I stand on fees. VERY fee sensitive. You (now) know where I stand on Buy and Hold—”60-40″—its lazy. 

How is what we are doing for you…working for YOU? Let’s look at Friday’s sell-off and some performance to include that for a real-close at hand example (similar returns will be true of today’s market action, too).

For our Aggressive clients; Portfolios were down approximately -2%—a far cry from the market of -4% on average. Friday’s “delta” the excess returns—or diminished losses as in Friday’s case is 200% better than the market, and almost 2X my annual fee paid by clients. No monkeys here. 

Further, on a 3 month and a 1 Year basis aggressive clients are down YTD yet are benefitting from +2% to +7% outperformance over both time frames, evidencing that our attention to the Commodity asset class (versus lazy tech or S&P 500 like investments, alone) in the portfolios, since investment there was confirmed by our indicators late February, is indeed the work of perhaps a non-monkey. (See further stats, below) 

Sorry, folks, this monkey banter is NOT over for a long shot. Thank you for indulging me as this market environment is our time to shine. AND, for you to breathe easier in knowing that you, in fact, do have a different investment management team on your side. 

For our Moderate Clients Portfolios were down approximately -1.4%-1.75% on Friday—also well above market returns. A 60/40 blended index—one that a monkey would implement, would have posted a loss of approximately 2.5-3% on Friday, depending upon the primate. Again, validating annual fees, in ONE day alone.

For our Conservative clients Portfolios were down approximately -1% also well above conservative market returns. The Bond market AGG bellwether index, alone, was -0.60% Friday. 

More stats: 100% of our models outperformed corresponding indices last Friday, there is no reason why the same is not true today. The mix of these models as customized for YOU is where the rubber meets the road with your risk tolerance and financial objectives. On 3-month basis (since confirmation of Commodities over-taking Domestic Equities on the asset scale), all of our models are out-performing market benchmarks by +3.48% to +7.16%On a 12-month basis  +1.09% to +7.17%, model dependent
“Sell in May and go away”—is what the monkeys will tell you.

What I’ll tell you; 

We ARE Market Centric: 
We are in a Bull Market (yes, still), yet with Commodities as the #1 Asset Class on a relative strength basis, we are beating equity benchmark returns as a function of honoring where the returns are (energy, oil, base metals, agriculture, gold/commodities).

We ARE Client Centric: 
How is your 3-Year Bucket? This drives the risk you should and/or need to accept in your portfolio. How much fixed income do you REALLY “need” given this is and will continue to be a bad year for bonds.

Don’t know where you stand with your 3-Year Bucket or our Portfolio Methodology? Let’s talk turkey (not monkey!).

Let’s connect and review exactly how your portfolio is standing up in these trying times and collectively discuss if you need a shift in your allocation or if you’re just where you’re supposed to be. 

CLICK HERE to schedule a 30 minute call.

Or click HERE and let’s set up a time to have full review.

I’d like to close with what you won’t hear on the airwaves; the economy is not as bad as CNBC or others may want to believe. 

I do NOT believe we are entering a recession — nor do I think it will happen in 2022. Why?

Strong household balance sheets, household consumption and business investment3.6% unemployment rate, strong continued job growth and the level of debt relative to household income (we talked about this in February you may recall)3.6% unemployment rate, strong continued job growth and the level of debt relative to household income (we talked about this in February you may recall)Strong household balance sheets, household consumption and business investmentPersonal Consumption Expenditures (PCE) Price Index data for March revealed “quite elevated” headline inflation, but so-called core inflation finally recorded its first slow-down on a year-over-year basis in core PCE since October 2020.
From someone else who I also place one or two levels above a monkey, Andrew Hunter, senior U.S. economist at Capital Economics commented recently on #5 above and current inflation, “The bigger story from today’s data releases was further evidence that inflation is starting to ease.” Further, Hunter said the leveling off of the inflation data “supports our view that inflation will fall a little more quickly this year than Fed officials now appear to expect.” And, of course I had to share with you the below Asset Scale lineup.It is in NO WAY—not even close to signaling a 2008 recession or any recession at this point. This should be listed as #1 above in addition to the economic data that points to a case for volatility yet not a recession:
For a refresher, January 2008 we saw Domestic Equities slide to the 4th position on the Asset Scale — 8 months before the market sell-off and the beginning of the 2008 financial recession.

READ THIS before we chat: If Domestic Equities slide to 3rd place from its current position of 2nd, WE WILL dramatically reduce equity exposure.

I will repeat something you hear from me often: WE ARE STOCK AGNOSTIC
If stocks are not one of the top 2 traded assets classes, we will be void stocks or stock-light. As evidenced in your portfolios for the last 3 months—and today, there are ways to earn returns on the market outside of traditional equities/stocks–such as in gold, and other non-equity correlated commodity investments.

Today is not pretty. No way to dress up that, just know that your accounts did not perform as poorly as the overall markets.
Thank you for your trust and confidence in good markets and in particular, the bad ones, too. As always, I welcome your feedback so that I can better communicate with you at times like today.

Committed to your financial success, 
Helen “Cokie” Cox, CFP®   

Alphavest, CEO
Wealth Enhancement & Preservation, Managing Partner, Charleston
Two Names, ONE Vision. Putting the “I” back into Investor.

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