I say this from hard-earned experience that was a little too close for comfort. The first lesson came when my son slipped off the trail, catching himself at the last possible moment, hanging on by his fingertips. The second came just four months later when my father lost his footing in nearly the same way. That time, it took a harrowing 12-hour rescue to bring him to safety.
The market, like our Colorado hiking adventures, feels a bit more slippery than it felt just 3 months ago. During the 1st Quarter, US Equities experienced a pullback, while fixed income provided stability as interest rate expectations shifted.
When my son slipped off the trail, we didn’t have a rope. But we did have something else. Our family dog, who instinctively ran beneath him, giving him just enough support to regain his footing. When my father lost his step months later, he didn’t have a rope, but other preparations made all the difference. He was wearing sturdy hiking gloves, allowing him to grip the rocky terrain. He was able to call for help, ensuring rescue teams knew where to find him. And he had enough hiking experience to find two solid rocks to stabilize himself until help (and ropes) arrived.
In both moments, the missing rope was legitimate cause for fear, but because of other preparations, the rope’s absence did not change our family story.
This is the essence of a well-structured investment strategy. It’s impossible to predict every twist and turn in the market, but a strong plan doesn’t rely on one single factor; it is built with multiple layers of resilience, allowing one part to pick up the slack for the lack of the other.
During the first quarter, the market didn’t have the “rope” that has been the US Technology. That segment of the market, as represented by the NASDAQ 500 Sec/Information Technology Total Return Index, was down -12.65% in the quarter. Positive returns in other parts of the market, including US Large Cap Value stocks, International Stocks, and the bond markets helped portfolios keep their footing. Specialized strategies that limit stock downside risk or allow for asymmetric returns also did well last quarter, buffering out some of the downside volatility.
Periods of market complexity draw attention to sophisticated, well-structured approaches. The path can seem slippery, and we all miss the rope from time to time. But just as preparation, experience, and the right tools made all the difference on the trail, a resilient investment strategy keeps a single challenge from derailing long-term goals. Volatility and uncertainty will come, but with a steady hand and a disciplined plan, they do not need to change your story.
The S&P 500 Index is a market capitalization-weighted stock index. It is comprised of about 500 stocks of the largest capitalization companies that are traded on U.S. stock exchanges.
The MSCI ACWI Net Index measures the performance of large and mid-cap companies across 23 Developed Markets and 27 Emerging Markets. The MSCI ACWI® Net Index subtracts foreign taxes applicable to US citizens.
The Bloomberg US Aggregate Bond Index measures the return of investment grade debt across the US market.
All returns are reported assuming that interest, capital gains, and dividends are reinvested.
Past performance is not indicative of future results.
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