Key Points:
Uncertainty
- Inflation and policy uncertainty continue to be primary issues markets are contending with, and it’s critical to position portfolios accordingly.
Hedges Are Performing as Expected
- Assets that typically hedge well against inflation—financials and precious metals—are functioning as they should in the current environment although a weak market is impacting all equities.
Cash Positions Provide Optionality
- Barometer is holding cash positions to maintain flexibility. This provides the option to act quickly when opportunities arise as the current market cycle runs its course.
Potential for New Market Leadership
- New leadership has been emerging in global stocks and inflation-oriented securities.
- Global equities may outperform US stocks over the next decade, a trend that would not be unusual given historical precedents.
Portfolio Diversification Beyond Major US Stocks
- There’s an emphasis on diversifying beyond the largest US stocks, which have dominated in recent years.
- The team highlights the importance of having capital positioned outside of the familiar names.
Prepared to Raise More Cash if Needed
- If market conditions deteriorate further, the team is prepared to raise additional cash but is currently building a farm team to be prepared when conditions improve.
- Barometer continuously assesses the situation and adjusts positioning proactively.
Disciplined and Active Portfolio Management
- Clients should have comfort that portfolios are well positioned —the team actively manages risk daily and makes adjustments as necessary.
Normalcy of Corrections
- The current market correction, while unsettling, is viewed as a normal part of market cycles.
The team reiterates that 10% corrections occur frequently (almost yearly), but they stay disciplined in their approach.