| View this Email in your Browser · Forward this Email to a Friend | CONNECT |  |
 |
 |
|||||
|
|
Finished With Engines?
By Morgan Christen Every now and then someone asks us, “what is a Spinnaker?” For those who do not know, a Spinnaker is a large, brightly colored sail you may see when a sailboat is moving with the wind at its back and generally in calmer waters. Kind of like Spinnaker Investment Group, as we try to use the markets to position the wind at your financial back and hopefully guide you into calm waters. |
|
|
Keeping with this theme, I will dive into another nautical term: “finished with engines.” This is a phrase used throughout the years in maritime operations. What does it mean? The term is used by those operating a ship to indicate engines are no longer needed for propulsion and can be shut down. Commonly, it indicates the journey is over as the destination has been reached, hence there is no need for the engine. Dating back to when steam engines sailed our waterways, the bridge would communicate this to the engine room - a simple phrase to help ensure the safety of the crew and efficiency of the ship. |
|
Speaking of “finished with engines,” capital markets continue to anticipate when the interest rate ‘ship’ has reached port. The bond market (along with the stock market) is very dynamic. Trying to time an investment decision based on expected Fed moves has proven to be a fruitless strategy, as the expectations are baked into market prices. As the chart shows, markets may move before the Fed makes a decision. This would suggest basing bond buying and selling on a Fed prediction should be avoided. The Fed has suggested in recent commentary they are pleased with where inflation numbers are heading and markets are reflecting that. The Fed has been transparent from their bridge, letting the market engine room know where they stand. One critique could be, did they power up too late and fail to shut the engines down fast enough? |
|
|
|
|
|
Small cap stocks have recently surged. As you will see in the chart the crossover point came on the first day of Jerome Powell’s testimony before congress. He mentioned he was pleased with the direction of the economy and inflation. That signaled to the market that rates could be coming down soon - a positive for small caps. But the sustained rally could be a shift in sentiment and a sector rotation. Large growth companies, up until now, saw the lions share of capital being allocated to those few stocks. There could be a rotation in play, not only to small caps but to value stocks. |
|
|
|
|
|
Will the rotation continue? We hope so. We would like to see other sectors get some love. We preach diversification, but when seven stocks are crushing it, it may fall on deaf ears. For our clients, we own small caps along with sectors beyond the “magnificent seven” large growth companies. The changing of the guard is good. The bond market is currently suggesting the Fed will “finish with engines” by reducing rates a quarter point in September. We will see if that happens, but in the meantime, we will plow forward. Thank you all for your continued support, and we look forward to speaking with you. If you haven’t updated your financial plan, please reach out to your advisor. Good to keep things in check. |
|
|
|
|
Now Live: |
|
|
Earlier this week you may have received a text message from us introducing Market Alerts. We look forward to sharing breaking information with you, only when it matters. If you did not receive a text from us and you are interested in receiving Market Alerts, you can sign up by completing the form here. |
|
|
|
Have You Taken
A quick reality check for your portfolio |
|
|
|
|
Spinnaker Mobile App now Available for IOS |
|
|
|
|
Spinnaker Investment Group is a boutique, family-owned investment advisory firm that helps each investor design, implement and run a portfolio. We work directly with each client to help them realize their financial independence.
© 2024 Spinnaker Investment Group. All Rights Reserved. |
GET IN TOUCH
4100 MacArthur Blvd., Ste 120 |
|
|
|
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. Inflation is typically defined as the change in the non-seasonally adjusted, all-items Consumer Price Index (CPI) for all urban consumers. 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. The indices are not available for direct investment; therefore, their performance does not reflect the expenses associated with the management of an actual portfolio. 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. |