Markets during the 3rd quarter were fairly anemic when compared to the prior 2 quarters this year. The WallStreetBets and NFT frenzies for example have subsided, though still freshly entrenched in many investors minds as they make sense of both the proliferation of “social trading” and Non-Fungible Tokens in general. The re-opening from an economic standpoint continued and while the Delta variant of COVID-19 was thought to be a possible speed bump on the way to recovery it looks as if the potential bump has been flattened out as best as we could have hope. Most recently, supply chain disruptions are front of mind, for many investors as is the onslaught of inflation in the US and abroad. We still do not know the potential impacts these two developments could have on earnings but are optimistic that disruptions at this point will not weigh on earnings appreciably. As of writing, the Debt Ceiling has been punted to December and markets have been given a slight reprieve from that anxiety.
Our outlook for the remainder of the year is largely neutral on equities as we do not think there are enough positive catalyst surprises to power higher equity markets on the US side of the equation. We continue to prefer Value over Growth. International remains a relatively attractive investment vs. domestic equities and we prefer Financials and Energies from a sector standpoint. In Fixed Income, we still favor lower duration vs. longer term Fixed Income and will remain so until real yields approach 0 from the deeply negative position they are in based on CPI.
From a performance standpoint, Q3 was very much a pause in comparison to the prior 2 quarters this year with positive to negative Equity returns in the lower single digits in most cases and Fixed Income flat. The S&P 500 returned .58% with the Russell 1000 Growth (US Large Cap Growth) returning 1.16% and the Russell 1000 Value (US Large Cap Value) returning -2.98%. The Russell 2000 (US Small Cap Equities) returned -4.36% and the MSCI AC World Index ex US (international equities) returned -2.99%.
All of us here at GA hope you enjoyed your summers and are looking forward to cooler weather with family and friends as we approach the holiday season!
Take care,
Louis Civitarese
Chief Investment Officer
The information presented is believed to be from reliable sources but no liability is accepted for any inaccuracies. This is for information purposes only and should not be construed as a recommendation. Past performances is no indication of future performance and all investments entail risk.
Investment advice offered through Stratos Wealth Advisors, LLC, a registered investment advisor; DBA GA Investment Management.
