We hope everyone enjoyed a wonderful Thanksgiving weekend and had the opportunity to spend some quality time with family and friends.<\/p>\n
The third quarter brought a more challenging environment for investors. While major U.S. stock indexes remained near record highs, many individual companies gave back some of their earlier gains. Rising interest rates also weighed on bond returns as investors adjusted to a higher cost of capital. After several years of exceptional market performance, some consolidation is not unexpected.<\/p>\n
One development we are watching closely is the narrowing participation in equity markets. As of Friday, October 9, only about 26% of U.S. stocks were trading above their 50-day moving average and 39% above their 200-day average. Despite major indexes remaining near record highs, much of the strength has been concentrated in a relatively small group of large technology companies. This represents a change from the broader market participation we highlighted in previous updates and suggests a more selective investment environment.<\/p>\n
On the positive side, corporate earnings have continued to exceed expectations, supported in part by significant investment in artificial intelligence. Stronger earnings growth has helped bring valuations down relative to earnings, even as markets remain near their highs. This is encouraging, as earnings growth remains one of the most important drivers of long-term investment returns.<\/p>\n
There are certainly challenges ahead, including higher borrowing costs, ongoing geopolitical tensions involving Iran, and uncertainty surrounding the upcoming U.S. midterm elections. The next round of corporate earnings reports, beginning this week, should provide valuable insight into how businesses are managing these pressures.<\/p>\n
Looking ahead, we believe the exceptional returns of recent years may be difficult to repeat, but we remain cautiously optimistic. Continued earnings growth should create opportunities in selected areas of the equity markets. Higher bond yields have created some short-term challenges, but they also provide an opportunity to earn attractive returns going forward, making bonds a more competitive alternative to equities than they have been for much of the past decade. Alternative investments also remain an important part of our approach to managing portfolio risk.<\/p>\n
As always, our focus remains on maintaining diversified portfolios, identifying opportunities as markets evolve, and keeping your investments aligned with your long-term financial objectives. We expect periods of volatility but believe a disciplined approach will continue to serve investors well.<\/p>\n
If you have any questions or would simply like to discuss the markets or your portfolio, please don’t hesitate to reach out. We are always happy to connect.<\/p>\n
Regards,<\/p>\n
Mike, Darren, Brent & Paul<\/p>\n","protected":false},"excerpt":{"rendered":"
We hope everyone enjoyed a wonderful Thanksgiving weekend and had the opportunity to spend some quality time with family and friends. The third quarter brought a more challenging environment for investors. While major U.S. stock indexes remained near record highs, many individual companies gave back some of their earlier gains. Rising interest rates also weighed […]<\/p>\n","protected":false},"author":159,"featured_media":5547,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_oasis_is_in_workflow":0,"_oasis_original":0,"_oasis_task_priority":"","_exactmetrics_skip_tracking":false,"footnotes":""},"categories":[27],"tags":[],"class_list":["post-5545","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-quarterly-updates"],"acf":[],"yoast_head":"\n