President Trump, trade & the markets…Is it time to hit the panic button?

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Tim Holland, CFASenior Vice President, Global Investment Strategist

On this week’s podcast (recorded March 23, 2018), Tim discusses the Trump Administration’s trade policies and its impact on Brinker Capital’s portfolio positioning.

Quick hits:

  • Investors have been fixated on the Trump Administration’s trade policy. First, the proposed tariffs on steel and aluminum imports and now talk of much broader based action directed at China.
  • After rallying strongly off its February lows, the S&P 500 has been correcting on increasing concerns protectionist trade policies will torpedo consumer and corporate sentiment and spending, and ultimately the stock market.
  • We remain bullish on the economy and risk assets, including US stocks. Why? Simply put, the hard and soft economic data – or maybe said another way, reality, not rhetoric – tells us we should.
  • 4 BIG BOXES that help drive our thinking: fiscal policy, monetary policy, economic fundamentals, and sentiment.

For the rest of Tim’s insight, click here to listen to the audio recording.

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The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Holdings are subject to change. Brinker Capital, Inc., a registered investment advisor.

 

Get more out of your charitable giving

Wilson-150-x-150Thomas K.R. Wilson, CFA, Managing Director, Wealth Advisory

Typically, when we think about giving to charity, we think of all the lives we enrich by our support. What we sometimes overlook is how great it feels to do good.

As Elizabeth Dunn and Michael Norton explain in their book, Happy Money: The Science of Smarter Spending, “Giving and happiness are mutually reinforcing, creating a positive feedback loop.”

Covering a broad spectrum of research studies, Dunn and Norton demonstrate how those who enjoy the emotional benefits of giving feel good about themselves and tend to behave more generously in the future. They also explain that those who give to others feel wealthier than those who do not make donations, and when prosocial spending is done right, even small gifts can increase happiness.

The best way to make sure you get the most emotional benefit out of your charitable giving is simple: make your gifts about you.

YOUR choice

Reaching into your pocket when you feel backed into a corner does not strike the pleasure centers in the brain as much as when you open your wallet because you felt compelled out of a sense of purpose to do so.

Part of YOUR big picture

Next to saving for retirement and college, charitable giving is one of the top financial priorities for many American families. It has earned a seat at the financial and estate planning table along with other financial goals, yet many people overlook philanthropy when setting and prioritizing financial goals.

When you make charitable giving part of your larger financial and estate plan, you can be assured that your generosity does not negatively impact any of your other financial goals and that you gain all applicable tax benefits.

Speak to who YOU are as a person

The charitable contributions you make should reflect your most deeply held values and beliefs. Before you write your next check to charity, stop to clarify your beliefs and preferences. Do you want to end hunger, fight domestic abuse, spur economic development in your community, or eradicate cancer? Think about where you want to make an impact globally, nationally, or locally. Do you want to give to many or few? Make a list of the top three to five causes that speak to your soul. The smaller the list, the more focused your giving, and the better you will feel.

Parameters set by YOU

If you are like many other givers, you don’t know how much you’ve given to charity until tax time. By establishing a charitable budget each year, you can make better decisions about funding levels for individual causes and initiatives. With the changes brought about by the Tax Cuts and Job Act, you should speak to your accountant about having your charitable donations distributed via RMDs or see if bundling your donations are right for you.

Organizations YOU trust

Whenever you make a donation,  it is a good idea to verify that the charity is legitimate and is capable of making an impact and fulfilling its mission. You can find information about a not-for-profit’s tax-exempt status, mission, and finances at Charity Navigator, Wise Giving Alliance, or Guidestar.

Make the impact YOU want

If you don’t specify how you want your gift to be used, the not-for-profit organization will likely spend the money on their top funding priorities. In some, but not all instances, the organization’s top funding priorities align with your interests. You can, however, make a restricted gift. In doing so, you earmark your dollars to serve a specific purpose, spelled out clearly by you in a written letter of instruction.

For 30 years, Brinker Capital has served financial advisors and their clients by providing the highest quality investment manager due diligence, asset allocation, portfolio construction, and client communication services. Brinker Capital Wealth Advisory works with business owners, individual investors, and institutions with at least $2 million. To learn more about the services available through Brinker Capital Wealth Advisory, call us at 800.333.4573.

The views expressed are those of Brinker Capital. Brinker Capital does not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any transaction. 

Brinker Capital, Inc., a registered investment advisor.

Investment Insights Podcast: 1 in 9.2 quintillion

Chris HartSenior Vice President

On this week’s podcast (recorded March, 16 2018), Chris talks about the parallels between March Madness and investing.

 

Quick hits:

  • Much like the task of filling out a perfect bracket, which currently stands at 1 in 9.2 quintillion, the chances of correctly predicting drivers of future returns is nearly impossible even for skilled investors.
  • Many have heard the term momentum in the stock markets, and behavioral finance will tell you that novice investors chase performance by allocating to last year’s winners under the guise that results for this year will be the same.
  • While picking the occasional upset is possible, most of the time fans are wrong relying on intuition or gut feel to pick an upset, and it costs them.
  • Brinker Capital knows how difficult it is to achieve successful outcomes, and has investment disciplines in place to help protect and build wealth over the long term.

For the rest of Chris’s insight, click here to listen to the audio recording.

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The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Holdings are subject to change. Brinker Capital, Inc., a Registered Investment Advisor.

The financial advisor as emotional coach?

Crosby_2015-150x150Dr. Daniel Crosby Executive Director, The Center for Outcomes & Founder, Nocturne Capital

One of the reasons psychologists can charge $200 per hour to ask, “How does that make you feel?” is because we have become great at putting fancy-pants labels on things that would otherwise be very intuitive. Take for instance the tongue-twisting “affect heuristic,” which is simply a reference to our tendency to perceive the world through the lens of whatever mood we are in.

For example, when giving a seminar on risk assessment, I often ask participants to write down the word, that if it were spelled phonetically, would be “dahy.” Go on, write it down and don’t over think it. It turns out the way you spelled the word has a lot to do with the kind of day you are having. Those that spelled the word as “die” may need a hug, while those that spelled the word “dye” are probably doing fine.

Ask someone having a bad day (those that wrote “die,” I’m looking at you) about their childhood and they are likely to tell you how they were chubby, had pimples, and never got picked first for kickball. Conversely, ask someone having a good day about their childhood and they are likely to recall summers in Nantucket and triple dips from the Tastee Freeze. Memory and perception are moving targets colored by our mood, not infallible retrieval and evaluation machines through which we make unbiased decisions.

financial advisor as emotional coach

So, what is the moral of all of this psychobabble? Think back to the last time you went shopping when you were hungry. Once you’ve brought that to mind, think back on the contents of your shopping cart. If you’re like me, you probably had a whole mess of HoHos, DingDongs, Nutty Buddies and Diet Coke (you don’t want to get fat, after all), but nothing very healthy or substantive.

The same rules apply to any life decision requiring risk assessment; if you try to make decisions when you are happy/sad/angry/in love/anxious/worried/euphoric, you are likely to end up with a life full of junk. When speaking to investors about the affect heuristic, I borrow an acrostic from the addiction literature – H.A.L.T. – which stands for hungry, angry, lonely or tired. The 12 step and other programs encourage those in recovery not to make decisions when they are in any of the emotional states described in H.A.L.T. and this advice is just as sound for investors. You do not view investment risk independent of your emotional state and so making long-term financial decisions in a short-term elevated emotional state should be avoided altogether. For help avoiding excessive emotion, try one of the following:

  • Exercise vigorously
  • Redefine the problem in terms of longer-term goals
  • Limit intake of caffeine and alcohol
  • Talk to a friend or your financial advisor
  • Don’t react right away
  • Shift the focus of your attention
  • Label your emotions
  • Write down your thoughts and feelings
  • Challenge catastrophic thoughts
  • Control whatever aspects possible including diversification and fees

The Center for Outcomes, powered by Brinker Capital Holdings, has developed an educational program to help advisors employ the value of behavioral alpha across all aspects of their work – from business development to client service and retention. To learn more about The Center for Outcomes and Brinker Capital, call us at 800.333.4573.

Brinker Capital is a privately held investment management firm with $21.7 billion in assets under management (as of December 31, 2017). For 30 years, Brinker Capital’s purpose has been to deliver an institutional multi-asset class investment experience to individual clients. Brinker Capital’s highly strategic, disciplined approach has provided investors the potential to achieve their long-term goals while controlling risk. With a focus on wealth creation and management, Brinker Capital serves financial advisors and their clients by providing high-quality investment manager due diligence, asset allocation, portfolio construction, and client communication services. Brinker Capital, Inc. is a registered investment advisor.

The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Brinker Capital, Inc., a registered investment advisor.

 

Investment Insights Podcast: March 2018 market and economic outlook

Leigh Lowman, CFA, Investment Manager

On this week’s podcast (recorded March 9, 2018), Leigh provides a brief review of February markets.

 

Quick hits:

  • Market volatility came roaring back in February with the VIX index surging to levels last seen in 2015 and washing out signs of complacency that were present earlier in the year.
  • The S&P 500 Index finished the month down -3.7% and is up 1.8% year to date.
  • Developed international equities underperformed domestic equities for the month.
  • Within fixed income all sectors posted negative returns.
  • Overall, we continue to remain positive on risk assets over the intermediate-term.

Listen_Icon  Listen to the audio recording.

Read_Icon  Read the full March Market and Economic Outlook.

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The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Holdings are subject to change. Brinker Capital, Inc., a Registered Investment Advisor.

 

Vlog – Trade wars are bad for business; Fortunately, we aren’t in one, yet

Brinker Capital’s Global Investment Strategist, Tim Holland, provides perspective on the Trump Administration’s tariff announcement.

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The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Holdings are subject to change. Brinker Capital, Inc., a registered investment advisor.

Investment Insights Podcast: Fiscal policy takes the baton from monetary policy – What it means for the economy & risk assets

Tim Holland, CFA, Senior Vice President, Global Investment Strategist

On this week’s podcast (recorded February 23, 2018), Tim takes a closer look at US fiscal policy and how it might impact the economy and markets as we move through 2018.

Quick hits:

  • For now, we see fiscal policy as a net positive for economic growth and risk assets, particularly equities.
  • We also don’t see interest rates and inflation as a risk to the economy and markets.
  • We do think rates are biased higher, which is one reason we are conservatively positioned within fixed income.
  • Increased investor concern over higher rates and inflation is driving greater market volatility, something we all lived through earlier this month.

For Tim’s full insights, click here to listen to the audio recording.

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The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Holdings are subject to change. Brinker Capital, Inc., a Registered Investment Advisor.

Introducing Brinker Capital RIA Services

Marino_R 150 x 150Roddy Marino, CIMAExecutive Vice President
National Accounts & Distribution

For 30 years, Brinker Capital has helped advisors provide better outcomes for their clients. Building on that track record, we are thrilled to announce the launch of Brinker Capital RIA Services. This recently established division focuses on better serving RIAs, who are experiencing rapid growth by bringing together like-minded partners, a fully-digital platform, and a team of experienced professionals to support the business.

In the video below, Brendan McConnell, Chief Operating Officer, discusses Brinker Capital RIA Services with Matt Ackerman of InvestmentNews and the reasons behind the launch.

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To learn more about Brinker Capital RIA Services, register for a webinar on Wednesday, February 21 at 4 PM ET. Frank Pizzichillo, Managing Director, RIA Platform Services, and I will discuss the guided and open-architecture investment solutions; multi-custodial flexibility; proposal and reporting technology; and the dedicated support team.

Brinker Capital is a privately held investment management firm with $21.7 billion in assets under management (as of December 31, 2017). For 30 years, Brinker Capital’s purpose has been to deliver an institutional multi-asset class investment experience to individual clients. Brinker Capital’s highly strategic, disciplined approach has provided investors the potential to achieve their long-term goals while controlling risk. With a focus on wealth creation and management, Brinker Capital serves financial advisors and their clients by providing high-quality investment manager due diligence, asset allocation, portfolio construction, and client communication services.

The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Brinker Capital, Inc., a registered investment advisor.

Vlog – Market volatility: It’s back! Why? And what comes next?

Brinker Capital’s Global Investment Strategist, Tim Holland, provides perspective around recent market volatility, what triggered it and what impact it’s having on our thinking and portfolio positioning.

The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Holdings are subject to change. Brinker Capital, Inc., a Registered Investment Advisor.

February 2018 market and economic outlook

Lowman_FLeigh Lowman, CFA, Investment Manager

Despite the pick-up in volatility at the end of January, risk assets continued their upward ascent throughout the month. Expectations surrounding the implementation of the newly passed tax reform bill and the weakening US dollar served as positive catalysts for the month. Macroeconomic data was mixed; fourth quarter real GDP growth came in slightly below expectations but manufacturing activity accelerated and the US jobs report was positive. Although we have seen initial signs of rising inflation, levels remain subdued as low unemployment has yet to translate into meaningful wage growth. We expect the Federal Reserve (Fed) to remain on track with interest rate normalization and the positive, albeit choppy, market momentum we have seen to date indicates that markets can likely withstand an additional Fed rate hike in March.

The S&P 500 Index was up 5.7% for the month with cyclicals outperforming defensive sectors. Consumer discretionary (+9.3%) led while tax cuts and a solid job market served as positive catalysts. Information technology (+7.6%) and financials (+6.5%) also posted strong returns for the month. Utilities (-3.1%) and REITs (-2.0%) were down as traditional bond proxy sectors experienced headwinds amidst rising interest rates. Growth outperformed value and large-cap outperformed both mid-cap and small-cap equities.

Developed international equities (+5.0%) performed in line with domestic equities. Fundamentals within the Eurozone continued to improve and sentiment is high. The focus remains on European Central Bank policy and how the reduction of its quantitative easing purchases will impact markets. Emerging markets were up 8.3%. A weaker dollar and stronger demand for commodities served as tailwinds for both emerging Asia and Latin America regions.

Feb. 2018 Market Outlook

The Bloomberg Barclays US Aggregate Index was down -1.2% for the month. Interest rates surged with 10-year Treasury yields increasing 31 basis points, ending the month at 2.7%. Tightening monetary policy and improving US growth expectations will likely continue to put upward pressure on the long end of the yield curve. High yield was the only sector to post positive returns in January, as credit spreads continued to grind tighter. Like taxable bonds, municipals were negative for the month.

We remain positive on risk assets over the intermediate-term, although we acknowledge we are in the later innings of the bull market and the second half of the business cycle. While this cycle has been longer in duration compared to history, the recovery we have experienced has been muted, supported by the extended recovery period. While our macro outlook is biased in favor of the positives, the risks must not be ignored.

We find a number of factors supportive of the economy and markets over the near-term.

  • Pro-growth policies of the Administration: The Trump administration has delivered a new tax plan and a more benign regulatory environment. We could see additional government spending on infrastructure in 2018.
  • Synchronized global economic growth: Growth in the US has started to accelerate, and growth in both developed international and emerging economies has meaningfully improved. The tax cuts could also help to boost GDP growth in 2018.
  • Improvement in earnings growth: Corporate earnings growth has improved globally and corporate tax reform should further benefit US-based companies.
  • Elevated business sentiment: Measures like CEO Confidence and NFIB Small Business Optimism are at elevated levels. This typically leads to additional project spending and hiring, which should boost growth. The corporate tax cut should also benefit business confidence and lead to increased capital spending.

However, risks facing the economy and markets remain, including:

  • Fed tightening: The Fed will continue to tighten monetary policy, with at least three interest rate hikes priced in for 2018. We may see tightening from other global central banks as well.
  • Higher inflation: Current levels of inflation are muted but inflation expectations have ticked higher and the reflationary policies of the Administration could further boost levels. Should inflation move higher, the Fed may shift to a more aggressive tightening stance.
  • Geopolitical risks: Geopolitical risks including trade policies and global challenges could cause short-term market volatility.

Despite the volatility experienced over the last week, the technical backdrop of the market remains favorable, credit conditions are supportive, and global economic growth is accelerating. So far President Trump’s policies are being seen as pro-growth, and business and consumer confidence are elevated. The onset of new policies under the Trump administration and actions of central banks may lead to higher volatility, but our view on risk assets remains positive over the intermediate-term. Higher volatility can lead to attractive pockets of opportunity we can take advantage of as active managers.

Brinker Capital Barometer (as of 1/5/18)

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Source: Brinker Capital. Views expressed are for informational purposes only. Holdings subject to change. Not all asset classes referenced in this material may be represented in your portfolio. Indices are unmanaged and an investor cannot invest directly in an index. All investments involve risk including loss of principal. Fixed income investments are subject to interest rate and credit risk. Foreign securities involve additional risks, including foreign currency changes, political risks, foreign taxes, and different methods of accounting and financial reporting. S&P 500: An index consisting of 500 stocks chosen for market size, liquidity, and industry grouping, among other factors. The S&P 500 is designed to be a leading indicator of US equities and is meant to reflect the risk/return characteristics of the large-cap universe. Companies included in the Index are selected by the S&P Index Committee, a team of analysts and economists at Standard & Poor’s. Bloomberg Barclays US Aggregate: A market capitalization-weighted index, maintained by Bloomberg Barclays, and is often used to represent investment grade bonds being traded in United States.