A quick reminder to you our clients - your quarterly reports are available and can be viewed through your Client Portal.

By Wayne Wagner Jr.

A Time for Patience

The third quarter of 2023 was another challenging one for the markets as both stocks and bonds lost value against the backdrop of continuing rising interest rates. We are now 20 months from the market highs and markets are now down 10-12% from their highs.

These seasons with market volatility and extended periods where the markets are finding neither some burn out low point nor new highs are painful and there is a need to keep our eyes on the horizon: longer term performance, longer term goals. With geopolitical unrest spreading, interest rates at 25-year highs, massive debt refinancing pending and government deficit spending at unsustainable levels – there is no shortage of reasons for the market to have trouble finding its legs right now. Compound this with the fact stock market indexes are up year to date because of a high concentration in 7 mega cap technology stocks and owning a diversified portfolio of stocks, bonds, and annuities this year feels like we are missing out. We are indeed in a period where owning a diversified portfolio is lagging broader market indexes for the Year-to-Date period in 2023. However, the opposite was true in 2022 and if we simply extend our timeframe to the point of the market highs (late 2021). It has been said,

“Diversification is the conscious decision to never make a killing in exchange for the all-important blessing of never getting killed.” This is as true today as it ever has been.

I know I continue to be a “negative nelly” of late – this is so opposite my actual personality that it is hard for me to keep it up. However, the preponderance of the data calls for sobriety, patience, protecting before we advance and not jumping into over inflated sectors and over concentrating your assets in individual industries that historically have wide swings up and down.

Not everything is negative. While many people can’t afford to buy that first home or perhaps even move for a job because they can’t afford to leave their 3% mortgage, the fact remains that housing prices are high and continue to climb aided in part by the lack of supply which is being forced the inability to move mentioned above. This means on paper, people who own houses are watching their net worth continue to climb. Additionally, the “great on shoring” occurring as companies bring manufacturing back to the US after the Covid pandemic is creating ongoing positive forces for our economy. This may just help us find that mythical “soft landing” and our economic path forward.

We anticipate economic volatility moving into 2024 with a market that follows.

We are continuing a conservative allocation strategy with an eye toward rebalancing as the market gives us opportunities. Keep this in mind: we are not market timers or day traders. When things are “normal” we will hold a basket of high-quality stocks and diversify with bonds and annuities for the lower volatility asset classes. We have been in an unprecedented period of change and so when you look back at the last 5 years, here are some of the “moves” we made:

• 2019 – we allowed cash to grow in accounts and generally took a moderate approach.
• March 2020 – we moved roughly 1/3 of our client’s lower risk assets into the stock market with a plan to buy more if the markets continue to fall.
• 4th Q2021 – took some equity exposure off the table and moved it to cash.
• Mid to late 2022 – moved the cash into higher yielding bonds and fixed index annuities.
• 2023 – we have been capitalizing on increased interest rates by updating the fixed index annuity exposure and maintaining a conservative bias with good diversification.

I long for the days of “normalization”. No one knows what will happen with the markets tomorrow, next week, next month, but we can make measured and informed decisions to maintain diversification and adjust our proverbial investment sails to meet the winds of the day.

Thank you for your patience and understanding during a challenging time for the markets. We always have your best interest at heart and act as fiduciaries for your well-being. Unfortunately, acting as a fiduciary demands prudence and sticking nearly 40% of your money into 7 big tech stocks doesn’t represent prudence – yet that is precisely where the S&P 500 sits today and that’s what you are doing when you own that index today.

We firmly believe diversification still matters and still wins the race in the long term. Give us some upside in up markets, avoid cliffs in down markets and keep your eyes on the horizon. We are always here to help you Envizion More.

Thank you for your business.

Wayne Wagner Jr, ChFC

Advisory services offered through WealthPlan Group, a DBA for WealthPlan Investment Management, a subsidiary Registered Investment Advisor of WealthPlan Group, LLC. WealthPlan Group, LLC is not a registered investment advisor, but is the holding company for WealthPlan Partners LLC and WealthPlan Investment Management, LLC.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which Investment(s) may be appropriate for you, consult your financial advisor prior to investing. Information is based on sources believed to be reliable, however, their accuracy or completeness cannot be guaranteed.

No investment strategy can assure success or completely protect against loss, given the volatility of all securities markets. Statements of forecast and trends are for informational purposes and are not guaranteed to occur in the future. All performance referenced is historical and is no guarantee of future results. Securities investing involves risk, including loss of principal. An investor cannot invest directly in an index.

The information in this communication applies solely to the intended audience and in no way amends, revokes, or otherwise alters the existing agreements and relationships between WPIM and its clients. This communication is not a binding offer, expressed or implied. WPIM undertakes no obligation to update or revise the information herein or in any referenced third-party resource due to new information, future events or circumstances, or otherwise.

WealthPlan Investment Management (“WPIM”) uses data compiled and/or prepared by third parties (“Third Party Data”) in the delivery of Licensed Research and Data. Third Party Data is not owned by WPIM and user may be required to obtain permission directly from third parties for further use of Third-Party Data and may be required to pay a fee depending on the use contemplated by the user.