November 2023
401(k) Allocation

401K Allocation

By: Jake Eggett

No trades.

Stocks have fallen to multi-month lows not because of a deterioration in fundamentals, but instead because an overly optimistic outlook has been rattled by geopolitical surprises, rising rates and mega-cap tech earnings that have not met extremely lofty expectations (but weren’t bad in an absolute sense.)  The S&P 500 is near correction territory (10% decline), while International Developed, Emerging Markets and Mid Cap have already drifted into correction mode declining between 10-14%.  If you look at Small Caps, they are flirting with Bear Market (20% decline) territory, having fallen nearly 18% since their July peak.  We’ll be monitoring closely if the Federal Reserve’s recent decision to keep rates steady sparks a rally or if the broad market weakness continues. 

Yields have continued to rise, with the 10-year Treasury briefly eclipsing 5.0% in October for the first time since 2007. While the recent rise in yields has centered on the longer end of the Treasury curve, it has not been contained to Treasuries alone. Higher-yielding bonds have also felt the pain as High Yield Corporates gave up some of their Year-to-Date gains. 

Given the current market trends, our stock models remain focused on U.S. Large Cap companies with a slight bent towards growth and mostly invested.  As for bonds, as rates continue to increase, we have positioned a portion of the portfolio in short-term treasuries and floating rate bank loans where yields remain attractive.  We remain out of High Yield Corporates for now.

MARKET UPDATE
FINANCIAL PLANNING

To download the November 2023 Newsletter: CLICK HERE

(Click on the Image to enlarge it.)