This Month’s Newsletter
Concerns of an Economic Slowdown? Join our Monthly Newsletter June 2019
Carl W. Hafele, CFA, CFP
Co-Chief Investment Officer, Principal
Numerous economic indicators have recently pointed toward an economic slowdown versus last year’s 3% GDP growth rate – a rate that smilingly silenced the secular stagnation touters. Should we be concerned? Is the long overdue recession just around the corner?
Over twenty years ago, I wrote an article about the drivers of stock returns by each decade. We have updated my research and the numbers vividly illustrate that an economic slowdown or slowing earnings are not necessarily bad for stock returns.
The 1950’s and 1980’s were both super decades for stock investors and experienced a very “Goldilocks” moderate earnings growth. The keys – low / falling inflation and low beginning valuation levels. In contrast, the 1970’s and 2000’s were terrible decades – one influenced by increasing inflation and decreasing valuation, the latter simply from high beginning PE multiples. And oh those 1990’s – our version of the Roaring 20’s.
So where are we now as we are about to embark on a new decade? We emphatically believe in the importance of solid economic policies. Low tax rates produce more incentives, higher GDP and solid earnings growth. Valuation levels are quite normal in a low inflationary environment. The growth of big government and excessive regulations has been thwarted.
We believe earnings can continue to grow, albeit at a slower pace than the most recent years. Stocks should return a moderate 6-8% annually with volatility measures being hot and cold.
As always, our philosophy includes having exposure to the traditional asset classes of stocks and bonds augmented with owning alternative investments to materially decrease risk and lower correlation to the overall market.
Carl W. Hafele, CFA, CPA, is Co-Chief Investment Officer and Principal at Lanier Asset Management. He is also an instructor in Finance and Economics for the MBA program at Bellarmine University.
May 2019: Benefits of Hedge Fund Investing
April 2019: Yet Another Burden On The US Economy
March 2019: Capitalism vs. Socialism: The Debate is Alive and Well
February 2019: What Are the Most Important Factors for Investing in a 401k Plan?
January 2019: A Look Back and a Look Ahead
December 2018: The Inverted Yield Curve - In Layman's Terms
November 2018: A False Sense of Security
October 2018: Reflections From Over Four Decades
September 2018: A Decade of Assisted Recovery
August 2018: The Entitlements Train Wreck - Possible Solutions?
July 2018: Is Wage Growth In This Country Improving Over Time?
June 2018: The Impact of Corporate Tax Reform
May 2018: Kentucky Derby Talks - Bulls vs. Bears
April 2018: How Much Longer Can Interest Rates Stay So Low?
March 2018: Policies For Economic Growth
February 2018: Volatility
January 2018: So What's In Store For 2018?
December 2017: Tax Cuts and Jobs Act: Good or Bad for Me? It Depends.
November 2017: Whack-A-Mole - D.C. Style
October 2017: Should You Consider a Robo-Advisor?
September 2017: Alternative Investments - What and Why?
August 2017: The QT Quandary
July 2017: Quality of Life Influencers (Cont'd)
June 2017: Quality of Life Influencers
May 2017: Repatriation Myths and Realities
April 2017: Time to Invest in International Equities? Let's Take a Look...
March 2017: Valuation - A History Lesson
February 2017: The Prince of Darkness
January 2017: Mountains of Debt - Does it Matter Anymore?
December 2016: Trumponomics: Reagonomics' Twin?
November 2016: Found Money
October 2016: Marrying Theory and Practice
September 2016: Do You Have a Sharpe Portfolio?
August 2016: Be Careful of High Dividend Stock Strategies
July 2016: "Die Younger" is Not a Strategy
June 2016: Blame Tina
May 2016: Would You Rather: Tax Cut or Tax Increase?
April 2016: Father Time Demands Your Attention
March 2016: What Has the Last Year Taught Us?
February 2016: Winners and Losers of the Oil Battle
January 2016: Diversification Improves Returns and Lowers Risk
December 2015: Synergy and the Art of Building High Performance Portfolios
November 2015: Take Control...or the Government Will For You
October 2015: A Note from Our Dean of Business
September 2015: Double Espresso at Midnight
August 2015: An Allocation to Hedge Funds - Essential!
July 2015: Another Greek Tragedy?
June 2015: What Does Financial Planning Mean To You?
May 2015: The Active vs. Passive Battle
April 2015: Out on an Island – Preparing for the Fed Rate Hikes
March 2015: To Fee or Not to Fee?
February 2015: European Central Bank Tries QE – Will it Work?
January 2015: 2014 Recap