3rd Quarter Market Update – 2021

Forward Financial Group |

Steven Dye fills us in on what has gone on in the financial markets this quarter. If you have any questions, don’t hesitate to contact us. This video is a little longer than normal because Steven discusses our process.

Hello and welcome back to another quarterly update. This is the 3rd quarter’s market update. For those of you that don’t know me, I am Steven Dye, a financial planner and partner here at Forward Financial Group. Another quick note before the update, thanks to all who came out to the cookout. It was a lot of fun and a little shortened by rain. It’s always fun to cook burgers and brats for all of you. I look forward to seeing more faces in the future at that event.

I want to start with something a little bit different from what we usually do. Before we get into what the market is currently doing, I want to pull back the curtain a little bit and get into how we create the portfolios. It starts with research in the time before the rebalance and quarterly update. Research is constant, but some of our deep dives involve bringing some of our partners in, hearing their thoughts, knowing this team thinks this and this thinks this. Most of us believe in the efficient frontier which means that stocks are priced as they should be. So, at any given moment they are where they should be. But what that research can help us find out what we think they are going to do in the future. We are listening to LPL’s weekly commentary, their daily commentary as well as their weekly podcasts and other areas. I love gathering info from different areas and putting it all together.

The next step is our quarterly meeting. Each quarter we get all of the advisors together in this room and go through not only what are our allocations, but what is the strategy we will go through this quarter. It’s almost like a board meeting. We don’t always agree, but it’s a great discussion. We talk though it and that disagreement can turn into an incredible conversation and is a good way to build these portfolios. When I said that core allocation before, typically we have this baseline of where we want to be in large cap, mid cap, small cap, international, bonds, things of that nature. We have that core allocation and we discuss, do we want to make changes with that. We always look at that original core that we built though looking at the history of the market and how things perform over a long period of time. We base our changes based on those things. But we continue to look at that core allocation. Once we decide on that, then we build the portfolios, put in funds, UTF, other investments. Then we put it into our software and see how it looks as a whole. Now we evaluate. If it looks great, that’s great, but typically it needs to be polished. We want to make sure that this portfolio we built meets the goals that we need it to meet. At that point we typically get together and make sure everyone is on the same page and ask is this ready. When it’s ready is when we bring you this rebalance. If you have any questions, I’d be happy to go into more detail with you.

On to the markets. It’s a lot of the same as last quarter. A lot of the concerns and positives are the same as last quarter. The general consensus is positive. It’s not something where we think we will have 20–30% returns, but consensus is still good. But there are still concerns. Inflation is one of them. With inflation we look at what the numbers are continuing to do. They are starting to slow down a bit, which is what we expected when we talked to you about how we think it’s transitory. We still think it’s transitory, it could be a little more sticky, but that’s why it’s important to have a solid portfolio of equities so it can keep up with the markets and have pricing power so that the stock continues to go with inflation.

The next piece is international. We’ve talked a lot about international over the past 3 quarters. It’s becoming more attractive to invest internationally especially in developed right now. Last quarter I was more excited about emerging markets than I am right now. That’s simply because China makes up the vast majority of emerging markets and they are over-regulating and cracking down on good companies making too much money right now. Also, geopolitical pressure. There is a ton going on in the middle east, China and Taiwan. Where semi-conductors are made. We are still excited but being cautious, but overall in the next 5, 6, or 7 years we are still excited about that investment so we are not taking out of it completely, we are just not over investing like we might have wanted to without these pressures.

Another piece of the market is Covid and the delta variant which is in the news constantly right now. It’s something that we are keeping aware of, but we don’t expect it the way the markets were effected in March of last year or any point since then. Looking at the numbers we are seeing a surge in cases, but not deaths. From where the markets look on confidence in consumers, it’s not as concerning as the past. As long as things don’t get out of control, we don’t think that will have much effect on the markets.

But with all of those things in general, the market hasn’t had a 5% correction since last October. In a healthy market cycle that could happen s once or twice year. For us to say that won’t happen again in the next year would be foolish. But we can’t predict it. It could happen, we are aware, but we can’t predict it. It’s called a correction for a reason, they are healthy in the market, they keep it going forward.

Moving on to what we are doing in the portfolios: we are bringing in more developed international, we are limiting emerging market exposure, but keeping there. We are going back to core allocation, back to the basics as the market seems healthier on a global situation. We are keeping risk level in line with goals. We want things to be not overly risky. As always, we create these portfolios to be appropriate with your risk levels and your time horizon. If those things have changed, please let us know. We’d love to be able to update your portfolio to be appropriate. As always if there are any other changes to your situation, financially or personally that you need your financial plan updated I’d be happy to go over that with you or anyone on our team could as well. Thanks for taking the time and if you have any questions please let me know, I’d be happy to help.


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results.

Economic forecasts set forth may not develop as predicted. All investing involves risk including loss of principal. No strategy assures success or protects against loss.

International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.