A quick take on the mid-term elections

Raupp_F_150x150Jeff Raupp, CFA, Chief Investment Officer

The 2018 mid-term elections were one of the most highly-anticipated mid-terms in recent history. As we digest the results and understand the new landscape, here are some initial thoughts on the potential impacts to the markets.

Uncertainty is reduced and that’s a positive for markets. Part of our rationale for cutting our risk weighting in September was that elections tend to bring uncertainty, and markets dislike uncertainty. While a few individual elections are still up in the air, we know we have a Republican-led Senate and a Democrat-led House. Since 1950, the S&P 500 Index had a positive return in every 12-month period following a mid-term election (17 straight periods!), with an average return of over 15%. Reducing uncertainty is a powerful force.

Both sides will claim victory. Democrats took the House, Republicans expanded their margin in the Senate. From a fiscal policy perspective, this looks to be a neutral outcome. For example, tax reform is unlikely to be rolled back, but also unlikely to be expanded.

There is potential for some compromise. Nancy Pelosi has traditionally believed in results over resistance, and many of the new Democratic House members lean moderate. There are a lot of variables here, but we may have some compromise over gridlock.

The biggest risk seems to be raising the debt ceiling in 2019. The Democrats biggest leverage point will be the debt ceiling vote in early 2019. In 2011, Republicans used that to gain concessions from President Obama to reduce spending. Early indications are that Democrats won’t go the route of brinksmanship, but it’s something we’ll watch.

Headline risks may increase. The Mueller investigation, changes at the SEC, oil and gas production/pipelines and more are potential headline initiatives, more likely noise with regard to the broader markets than anything larger.

Trade and fundamentals likely to take a leading role for markets. Softening of the trade rhetoric with China has been the primary cause of the 5+% bounce over the last week or so. The White House has recognized that, with President Trump’s re-election in 2020 now on the horizon, we would expect progress in 2019, albeit not linear progress. And, 3Q earnings are now projected to increase over 28% year-over-year. While concerns of peak earnings growth are probably founded, on an absolute level earnings should continue to be strong in 2019. As a result, we’ve seen stock valuations come down to levels below their 20-year average. In addition, economic growth continues to be solid and capital expenditures have been moving higher as corporations are putting their extra cash to work.

Brinker Capital’s Investment Committee continually monitors market conditions and follows a structured process for implementing decisions.  We employ a dynamic asset allocation approach that complements our long-term strategic allocation with active asset allocation shifts.  The active shifts are based on short- and intermediate-term macro views and enable our portfolio managers to take advantage of potential market opportunities and reduce exposure to potential risks, while staying aligned with portfolio objectives.

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.

Making sense of recent market volatility

This past week has been a very unsettling time for markets and investors. To help inform conversations, Jeff Raupp, CFA, Brinker Capital’s CIO, recorded a podcast that examines the recent market correction, including the catalyst for the sell-off and where we see the market heading into 2019.

Additionally, Dr. Daniel Crosby, Executive Director, The Center for Outcomes & Founder, Nocturne Capital, provides information to better understand market volatility and how to best react to the changes:

We hope you find these tools helpful and appreciate your continued confidence in Brinker Capital.

Brinker Capital, Inc., a registered investment advisor.

Investment Insights Podcast: Investing a lump sum of cash

Raupp_F_150x150
Jeff Raupp, CFA
Director of Investments

On this week’s podcast (recorded April 20, 2018),
Jeff discusses the pros and cons of investing a lump sum immediately versus systematically investing an equal amount monthly.

Quick hits:

  • Almost 75% of the time an investor did better with the lump sum investment, with an average return after 12 months of about 8%, versus 4.2% for systematic investing.
  • A systematic plan may make sense for some, as it establishes a strategy for getting into the markets and takes emotion out of the equation.

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

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Performance returns source: Brinker Capital.
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: Investor sentiment vs. corporate sentiment

Raupp_F_150x150
Jeff Raupp, CFA
Director of Investments

On this week’s podcast (recorded January 19, 2018), Jeff focuses on two indicators we include on the Brinker Capital Market Barometer, namely investor sentiment and corporate sentiment, and our thoughts on how they impact markets.

Quick hits:

  • If investors are extremely optimistic their expectations are high, and a certain degree of good news is already priced into the market, whereas bad news may come as a surprise and cause markets to pull back.
  • If companies have a high level of confidence, they’re more likely to invest in capital expenditures or hire additional people, both of which are good for the overall economy.
  • Intermediate-term indicators like corporate sentiment are ones we weigh heavily. While short-term indicators like investor sentiment are considered, their impact on positioning is much smaller.

For Jeff’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.

Top blog posts of 2017

We’re closing out the year with our top five blog posts of 2017. From retirement and behavioral finance, to in-depth market perspectives, these are the best of 2017. Enjoy!

Jeff Raupp, CFARaupp_Podcast_Graphic, Director of Investments

Investment Insights Podcast: Where markets go from here now that they’ve rallied post-election

 

 

CookPaul-150-x-150

Paul Cook, AIF®, Vice President and Regional Director, Retirement Plan Services

Avoiding retirement regrets

A dozen steps to a smooth transition to retirement

 

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

Can money buy happiness?

Purchasing power and the big power of small changes

Investment Insights Podcast: The complacency of markets so far in 2017

Jeff Raupp, CFARaupp_Podcast_GraphicDirector of Investments

On this week’s podcast (recorded August 7, 2017), Jeff discusses how in an upward trending market like this, investors often start overestimating their risk appetite.

Quick hits:

  • This past Friday marked the 34th record high for the Dow Jones Industrial Average in 2017.
  • The largest market drawdown that we’ve experienced in 2017 is just 3%.
  • The key to long term investing is choosing a good long-term strategy that you can stay with through up and down markets.

For Jeff’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.

Investment Insights Podcast: Recent rally in European stocks

Jeff Raupp, CFARaupp_Podcast_Graphic, Director of Investments

Year to date, we’ve seen European stocks rally over 15%, just about double the return of the S&P 500 index.

So what’s not to like?

Listen to the latest Investment Insights Podcast to learn about Brinker Capital’s perspective on European stocks.

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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: Three things we’ve learned in the first quarter of this year

Jeff Raupp, CFARaupp_Podcast_Graphic, Director of Investments

On this week’s podcast (recorded April 3, 2017), Jeff discusses three things we’ve learned in the first quarter of this year.

 

Here are some quick hits before you have a listen:

  • While the administration’s policies are still considered bullish for stocks, the road to implementation will be a bumpy one.
  • We remain in the second half of the business cycle.
  • A rising Fed funds rate does not mean get out of emerging markets.

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For Jeff’s full insight, click here to listen to the audio recording.

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: Where markets go from here now that they’ve rallied post-election

Jeff Raupp, CFARaupp_Podcast_Graphic, Senior Vice President

On this week’s podcast (recorded February 17, 2017), Jeff discusses some measures that we think are important to look at to determine where markets go from here now that they’ve rallied post-election. Here are some quick hits before you have a listen:

 

  • Market expectations are that the new administration’s policies will be pro-business and pro-growth, which has been driving prices up.
  • We want to see indications that the growth is real, that earnings will eventually justify current valuations.
  • Corporate confidence measures have risen dramatically in the last two months.
  • The NFIB Small Business Optimism Index is the second highest its been in the last 30 years.

For Jeff’s full insight, click here to listen to the audio recording.

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: 2016 perspective & 2017 positives

Raupp_Podcast_GraphicJeff Raupp, CFA, Senior Vice President

On this week’s podcast (recorded January 9, 2017), Jeff puts some perspective on 2016 and touches on three positives we see for markets moving into 2017. Here are some quick hits before you have a listen:

 

  • 2016:
    • The recession fears that fueled one of the worst starts to a year seem a distant memory
    • In spite of the spike in rates to end the year, the Barclays Agg finished the year with a return of +2.6%
  • 2017 positives:
    • Global growth
    • Monetary and Fiscal Stimulus
    • Investor expectations remain muted

For Jeff’s full insight, click here to listen to the audio recording.

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.