Come and get it

Come and get it

The fact that you are receiving this newsletter will tell you that your team at Spinnaker did not win the lottery. There goes our dream of a helicopter and yacht. Back to reality, and the reality is, its Fall and along with football, the color changes we have the stress of the holidays. Many would say it’s a very stressful time of the year. Your friends at Spinnaker have put together a timeline for a stress-free Thanksgiving dinner (one caveat, while some of us have been participants, none of us have been solely responsible for the feast).

What we have found is that planning and preparation make the day a lot more enjoyable for the host.

Two weeks before Thanksgiving: Start to prepare your list of guests including how many children. Don’t forget to ask about allergies and alcohol preferences. Nothing like running to the store to find a bottle of Smirnoff Cinnamon Churro Vodka at 4 PM Thanksgiving Day. Finally, make sure you have all the equipment needed to cook the meal; roasting pans, blender, thermometers, etc.

One week before Thanksgiving: Clean out the refrigerator, you need to make room for all the groceries and dishes. Start to shop for all your non-perishables as well as purchasing your frozen turkey. Rule of thumb is to estimate that each guest will eat about 1.3 pounds of turkey. So, if you have 15 guests assume you need a 20-pound bird.

Four days before Thanksgiving: Start to defrost that bird. You must defrost in the refrigerator, never at room temperature. For a 12-to-16 pound bird assume 2.5 to 4 days. Our 20 pounder above would take 5 days.

Two days before Thanksgiving: Time to clean the house, brine the turkey and prepare the sauces, jellies, and dressing.

One day before Thanksgiving: Time to purchase all your perishable items as well as get that beautiful table set.

Thanksgiving Day: Take the turkey from the refrigerator and let it sit for 90 to 120 minutes at room temperature. Prepare the turkey, stuffing, gravy, warm the rolls and garnish the dessert. Finally, enjoy.

CBOE (Chicago Board Options Exchange) Volatility Index

Source: Yahoo Finance

The last couple of weeks have been rough, maybe even stressful.  We have a Saudi cover-up, US mid-term elections, rising interest rates, US-China trade war, weakening quarterly earnings, Brexit, Italy and a month (October) that is quite often volatile.  Most disturbing, a recent study in the journal Nature Plants, an international group of researchers concluded that extreme weather events could cause barley yields to fall 3% to 17% (depending on severity) through 2099.  Less beer…stress level extreme.

Planning for a stress-free market experience

Much like planning for Thanksgiving, we checked to see how you feel about risk as well your short-medium-long term goals (allergies and preferences).  Then we check to make sure your accounts are set up and funded properly (the right equipment).  Once we have the allocation set, we monitor and report back to you.  Life happens, and we may need to make changes and adjustments to the plan. Markets have shown a bit more volatility this month, but we hope that we properly telecasted that to you.  We believe the opportunity cost of being out or trying to time the market is high.  Historically, the fourth quarter of a midterm election year, markets have gained an average of 8%, and the first quarter of the following year averaged a gain of 7.5%.

Some good news

  • Workers have more in their paychecks, so consumer spending still looks good
  • Strong labor market. There are more jobs offered than people willing to fill them
  • Inflation is still well contained
  • The trade war with China has spooked the market, but analysts believe it will shave only a couple tenths of a percent off GDP growth
  • Trade war is over with Canada and Mexico and maybe soon completed with the EU
  • Tides will shift in the midterms, but nothing (at least at this point) earth shattering

What then

There are concerns in the market, and as they say, the market will always find a wall of worry.  The frothiness of summer is over, and this selloff was inevitable and expectations have been reset.  The valve has been pressed and some air has come out.  Growth stocks (see below) which include technology were getting off kilter with historic norms.  Time for value stocks to have their day in the sun.  The fundamentals are still strong, interest rates are still historically low and the economy is still growing.

Source: State Street Global Advisors

The preparation has been done and this will not be the last time the markets get indigestion.  If you have any changes in your goals or risk tolerance, please get in touch with us.  We hope that you all have a happy and stress-free Thanksgiving.

 

Sincerely,

 

 

 

 

 

Morgan R. Christen, CFA, CFP®, MBA, CDFA
Chief Executive Officer

 

Disclosures
* Past performance is not a guarantee of future results. Indices are not available for direct investment. Index performance does not reflect the expenses associated with the management of an actual portfolio. CPI data are available from the US Bureau of Labor Statistics. Stock is the capital raised by a corporation through the issue of shares entitling holders to an ownership interest of the corporation. Treasury securities are negotiable debt issued by the United States Department of the Treasury. They are backed by the government’s full faith and credit and are exempt from state and local taxes. Past performance is no guarantee of future results, and there is always the risk that an investor may lose money. Diversification neither assures a profit nor guarantees against loss in a declining market. The information contained herein is based on internal research derived from various sources and does not purport to be statements of all material facts relating to the securities mentioned. The information contained herein, while not guaranteed as to the accuracy or completeness, has been obtained from sources we believe to be reliable. Opinions expressed herein are subject to change without notice.

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