Main Kokomo Office: 765-455-1554|info@sycamoreweb.com

2024 First Quarter Market Commentary

Hello from Sycamore,

Performance and the Markets

We are pleased to report that the first quarter was a bonus quarter with our composite gaining more than 7%. This is about three times the normal gain that we would expect so we’re pleased. While we do expect your account(s) to gain more before the year-end, we doubt that the current pace will be sustained. There’s plenty of good news on the economic front, and as you know we believe – in the long run – share prices and your account(s) value will follow the profitability of the companies you hold. There’s much that we cannot control but we can control the quality of the companies in your account(s), and that is where we put our efforts. Obviously, we want as much growth as possible but only if the risk is not too large. Maximizing growth is important, but not as important as controlling risk.

Does anyone remember early 2022 when many were expecting increasing interest rates to spark a recession? Hasn’t happened yet! Our economy continues to be stronger and more resilient than expected. If inflation moves lower, we expect interest rates to decline later this year. Lower interest rates could provide a boost for the overall economy and share prices.

The Magnificent Seven (Microsoft, Alphabet, Amazon, Apple, Meta, Nvidia, and Tesla) are still on a roll. As a group, they gained more than 100% and accounted for about 50% of the S&P 500 gain last year. As we have reported before, they now represent about 30% of the S&P 500 index. Maybe they’ll go up at this rate forever! Maybe this time it really is different! Maybe!

The Economy

From our perspective, the economy is solid. Inflation has been a bit more stubborn than we would like, but it’s better than one year ago. The current rate is about 3.5% which is a nice reduction from the roughly 9% peak in mid-2022 and…Producer Prices continue to decline. The Federal Reserve Bank of Atlanta now expects our economy to grow at a respectable rate of 2.4% for the first quarter of 2024. Unemployment continues to be historically low at less than 4%, which is better than our long-term average. The Bureau of Labor Statistics reported that we created more than 300,000 new jobs in March alone.

We are not saying everything is perfect, it rarely (if ever) is. For instance, commercial real estate values have declined somewhat over the past year or so, and new home sales could be better. We are saying that the economic underpinnings appear to be in place to support growth for both our economy and the companies that we have placed into your portfolio(s). In the long run, betting against the U.S. economy and everyone who runs a business, has been a poor bet. We remain optimistic.

Managed portfolio purchase and sale activity during quarter 1
Sales: Sally Beauty, Sirius XM Holdings, and Hexcel.
Buys: Dentsply Sirona, MGP Ingredients, UGI Group, and Malibu Boats.

As always, do not hesitate to reach out to our offices at (765) 455-1554 to discuss this.

Thank you for your continued trust and support,

Sycamore Financial Group

***This article is distributed for general informational and educational purposes and is not intended to constitute legal, tax, accounting, or investment advice.***

By |2024-04-30T04:00:21-04:00April 30th, 2024|2024 Newsletters|0 Comments

Volatile and Unpredictable

Hello from Sycamore,

As I write this post, the market is down ~10% from its recent high. The beginning of 2022 has been a bit volatile and unpredictable. When we read the news, we see headlines that stop us in our tracks: Inflation, War, Stagflation, Market Correction, Possible Recession.

Realistically, most news these days is created to grab our attention, pull us in. Reporting tends to be negative because negative news sells. It brings people back; it gets more people to click on the headlines. Media is a for-profit industry.

The volatility you are seeing is real. Inflation is normal. Market corrections are normal. Recessions are normal. We are not saying these feel good, or we need to be excited about them, but they are a normal course of business. The market has performed better than expected for the past 12 years – except for a flash recession in 2020. It is not surprising that as we enter the endemic phase of the pandemic and Russia invades Ukraine we might see some volatility.

Here are some facts:

  • Unemployment is down from its high of ~14.7% in 2020 and currently is at 3.8%.
  • Wages have been increasing more rapidly than prices. The average income for the bottom 50% of wage earners in the US were up over 11% in 2021.
  • In 1973 when Craig began in the industry the Dow Jones was just over 500 and today (3/9/22) it’s over 33,000.

From our research, the economy and corporate America appear to be in good shape. We still believe that the best course of action is to stay the course.

Thank you for your business and trust,

Sycamore Financial Group

***This article is distributed for general informational and educational purposes and is not intended to constitute legal, tax, accounting, or investment advice.***

By |2022-07-21T12:30:07-04:00March 10th, 2022|2022 Newsletters|0 Comments

Thoughts on the Economy

Hello from Sycamore,

COVID-19 has been a shock to our economy and our lives. As a result, the Federal Reserve Bank had to implement swift and significant monetary policy changes. During the onset of the pandemic (March/April 2020), there were worldwide shutdowns that caused many to lose their jobs, miss paychecks that were necessary to pay bills, and companies shuttered. The Fed knew that they needed to take an approach that would spur the economy as much as possible as the country started to reopen. They did this by reducing the reserve requirements for depository institutions, they bought bonds in the open market, and they reduced the interest rate to nearly zero. All these measures made the economy flush with cash, borrowing cheap, and saving not lucrative.

The extra cash that these changes have generated has spurred inflation, but inflation is not always a bad thing. The Federal Reserve has a long-term target inflation rate of 2%. The right amount of inflation in a stable economy can influence expansion. While ongoing inflation issues are certainly possible short-term, we think prolonged inflation or hyperinflation seems unlikely.

If inflation would persist, however, there are a few ways that the Fed can help slow economic activity. These are through changing reserve requirements at depository institutions, open market operations, and setting the discount rate.

  1. Reserve requirements refer to how much of a bank’s total deposits must be kept at the bank at the close of business every day. For example, if a bank has just $500 in deposits and the reserve requirements were 10% then they would only be able to loan out $450. Changing the requirement changes the money supply.
  2. Open market operations are when the Fed either buys or sells government securities in the open market. If they sell securities, they are removing money from the economy by exchanging securities for cash. If they buy securities, they are adding money to the economy by exchanging cash for securities.
  3. The discount rate is the rate that the Federal Reserve would pay to banks for depositing funds with the Fed overnight. This effectively sets a floor on the interest rate and the rate trickles down and influences other interest rates on loans such as car loans, personal loans, mortgages, business loans, etc.

All these measures can be used in different proportions to influence the economy and at various times or simultaneously.

Thank you for your business and trust,

Sycamore Financial Group

***This article is distributed for general informational and educational purposes and is not intended to constitute legal, tax, accounting, or investment advice.***

By |2022-07-21T12:29:41-04:00February 14th, 2022|2022 Newsletters|0 Comments

Riding Out the Stock Market – Summer 2008

Hello from Sycamore,

We thought it may be prudent to give you information on the markets in general, and to pass onto you some of our thoughts on all this.

As you likely know by now, the market has declined significantly this year. The Dow recently suffered its biggest percentage drop in more than six years, and is now down about 25% from its record close just last year, Oct. 9, 2007 Markets do go up and do go down. You know this, but when the market goes down, especially when it drops appreciably, it is unsettling. The volatility in the market is a common and normal activity of the stock market and should be expected.

Declines are common, take the following: The stock market since 1900.

  • A routine decline of 5% or more happens about three times a year and lasts about 47 days.
  • A moderate decline of 10% or more happens about once a year and lasts about 113 days.
  • A severe decline of 15% or more happens about once every two years and lasts about 215 days.
  • A bear market of 20% or more happens about once every 3 ½ years and lasts about 329 days.

(Capital Research and Management Company is source, flyer Sept. 2008)

Realistic Expectations on Stock Returns: As of 12-31-2007.

  • Over the past 60 years, stocks averaged 11.8% per year.
  • Over the past 40 years, stocks averaged 10.6% per year.
  • Over the past 20 years, stocks averaged 11.8% per year.
  • Over the past 10 years, stocks averaged 6.4% per year.

(From Global Financial Data, Stocks are Wilshire 5000 Index)

Good news you do not hear much about in the media.
(They want you to tune in tomorrow or buy another paper).

  • Interest rates are relatively low.
  • Inflation is moderate.
  • Our dollar has declined against other countries currencies, allowing other countries to buy goods and services produced in America for less.
  • Unemployment is not low but not high either.
  • We have been at this down market for almost a year now (See above).
  • We believe there are many companies that are good bargains.

What to do? While we wish we could predict the future of the markets, we cannot. We are advising you the best we can, but remember that there are no guarantees when it comes to investments in stocks, bonds or other financial instruments.

1) Don’t panic-Stay invested. You should have your monies diversified enough so that your short term needs are in a safe-liquid account and your longer term investments are in a broad basket of stocks, bonds and CDs.

2) Buy low-Sell high. We are likely in the “Buy low” part of this saying. This could be a good time to look at purchasing-not selling. Trying to time the market is difficult as it requires two near-perfect actions-getting out at the right time and getting back in at the right time. If you wait to get back in when you feel “comfortable” you may have missed most of the upswing in the market.

3) Re-evaluate your risk assessment. What percentage of your portfolio should you have in stocks? We can help on this one. We can then make any necessary change upon market recovery.

4) Invest regularly. Investing on an ongoing basis will take the guesswork out of timing the market. You buy in both up and down markets.

5) Seek professional guidance and review annually. We think it prudent to take a thorough look at your assets and investments once each year, make adjustments based on your risk-reward profile and go forward.

Markets do go up and down. The down part is no fun but is part of the package. If we can assist you in reviewing your investments, assets and risk assessment, please contact us.

Thanks for your business and trust,

Craig
Sycamore Financial Group

_________________

Past performance does not assure future results. Investors cannot invest directly in the stock market indexes such as the S&P 500. Invest return and principal value of an investment will fluctuate. Investor value, when sold, may be worth more or less than their original cost. The material in this presentation is for illustrative purposes and does not reflect any particular investment.

By |2022-07-21T12:19:19-04:00August 8th, 2008|Craig's Commentary 2008|0 Comments

Looking at Some Economic Indicators – Fall 2005

Better Than It Seems

As we’re meeting with our clients this fall, many are pleasantly surprised with the performance of their investment accounts. We frequently hear something like “ That’s great. With the market and economy being in so much trouble we were concerned that our investments may be as well” It seems that today more than at any other time, the perception of both the economy and the markets (mostly from the media) is very much different from the reality (the actual performance numbers).

The perception: crippling hurricanes, high gas prices, increasing interest rates and, so far this year, a quietly sagging stock market. Ouch!

The reality: Hurricanes? Nothing new there. Gas prices? Adjusted for inflation, the’re in the same neighborhood as 1982*. Interest rates? It could be that the rising interest rates are a positive indicator about the strength and the expansion of our economy. A quietly sagging stock market? Truth be known we’ve come to appreciate quiet markets.

Let’s take a look at some economic indicators.

  1. The Department of Commerce reported that second quarter 2005 Gross Domestic Product grew at a 3.3% annualized rate. A good rate.
  2. Housing starts rose 3.4% for September 2005 to an annual rate of 2.11 million units**. This is the fastest pace since Feburary and one of the highest rates ever.
  3. The Bureau of Labor and Statistics reported that the September 2005 unemployment rate was 5.1% (not the best we’ve ever seen, but certainly not the worst). Over the last twelve months ending in August 2005, payroll employment grew by an average of 194,000 a month and the unemployment rate has trended downward during that year.

Those of you who have been investors over the last ten,twenty, thirty or more years know that there is always an abundance of negative news. You also know how well the markets overall, and in particular your individual investments, have performed over those same periods.

We’re not saying that everything is rosy; we know that there is room for improvement. We are however, recommending that the next time you feel a little uneasy because of the current dose of bad news, call us for a closer look at reality.

Thanks for your business,
Sycamore Financial Group

*The Big Picture. Posted 8/17/05
** U.S. Department of Commerce report dated 10/19/05

_________________

Past performance does not assure future results. Investors cannot invest directly in the stock market indexes such as the S&P 500. Invest return and principal value of an investment will fluctuate. Investor value, when sold, may be worth more or less than their original cost. The material in this presentation is for illustrative purposes and does not reflect any particular investment.

By |2022-07-21T12:13:34-04:00August 20th, 2005|2005 Newsletters|0 Comments

ABOUT THE COMPANY

Sycamore Financial Group is an independently owned and operated regional financial services corporation. We use repeatable and sustainable processes and systems to support clients’ investment needs. This client-centered approach focuses on consistently producing the highest quality results in order to exceed your expectations. We concentrate our efforts and expertise to help assure the best possible results from your portfolio.

MORNINGSTAR RATING

MorningStar Rating Sycamore Growth and Income Composite was rated three stars against 697 Large Blend category funds overall for the period ending 12/31/2023
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