SUMMARY. Market volatility increased this week tied to interest rate concerns which rose to levels not seen since pre Covid-19. Growth valuations drew most scrutiny & concern and much of the excess speculation build up through the year reversed. Further, we saw continued rotation from relatively high valued "growth" stocks to relatively lower valued "value". Whether this continues will depend on direction of interest rates for rest of year. More fiscal spending may equate to higher rates, more rotation or churning of markets. As we outlined, we maybe entering a period where insane fiscal & monetary spending results on offsets to growth and net effects aren't sustainable nor significant longer term and in fact detract from growth.
INVESTMENT IMPACT. Our model portfolios have an overweight in defensive sectors and continue to hold high cash levels. The issue right now is finding stocks that are attractive valuation wise. Our model portfolios are a bit more concentrated vs norms to reflect this which maybe temporary. During Friday we added to existing positions on weakness and added a new small position of an EV car maker to our growth models. Volatility may continue for some time until interest rates stabilize as outlined above. If governments continue to rely on fiscal & monetary policies to produce growth this may severely limit potential returns as interest rates continue to rise.
Our model portfolio performance has been updated on our website as of 2/28/21.
For more insights see our website and disclosures found there at BCA. The thoughts contained in this newsletters are intended lend insights into BCAs current & future thinking on changes to BCA model portfolios. They are not intended to be recommendations and should not be taken as such. As always contact us for further explanation of how these events can affect your finances. To unsubscribe from our newsletters & website please email us with "unsubscribe" in the subject.