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Midyear Outlook: Acknowledging Where We Are: Market Commentary from Cabana’s CEO – July 7, 2020

4 years ago

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To start, I hope everyone had a safe and restful July 4th holiday. Time spent with family and friends is what matters most. The older I get the more that reality sinks in.

I have spent a lot of time over the past few weeks thinking about the world that we are living in and what that means for each of us as investors and as a collective society. I very much understand that it is often necessary to suffer some pain in order to grow and emerge better and stronger. This is true of human beings, our businesses, and even our country. With that said, I am 53 years old and I don’t believe I have ever felt such a divide among us. The undercurrent of frustration and anger is palpable. At least it is in Arkansas, and I suspect it is elsewhere. Between rabid political polarization, racial inequality, the COVID-19 pandemic raging in huge swaths of the country, and the never-ending onslaught of media (professional and social) – it can and does feel overwhelming. Sometimes it is important to just acknowledge where we are. That can be the first step in figuring out how we got here and, more importantly, how to get out. Let us be still for a minute or two and remember that we are all inherently good. We want the best for our children and our neighbor’s children. We are all made stronger by giving more than we receive. There are heroes all around us if we take the time to see.

The world equity markets continue to hold firm in the face of all manner of threats, domestic and biological. I suggested several times over the past few weeks that markets could move up rapidly if the major indices held above their 200-day moving averages after two rapid and steep selloffs during June. We may be seeing that start to play out now. The S&P 500 is within 2% of being positive for the year. That fact alone is amazing, and in my opinion the foundation for prices moving higher. After all, if you haven’t sold by now, what more bad news would it take? Look for a move above 322 on the SPY to cause additional money to move out of cash and back into equities.

A PDF of this week’s commentary is available at the following link:

Cabana-Weekly-Market-Commentary-July-7-2020Download
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January 17, 2024

This material is prepared by Cabana LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. This material may only be distributed in its original format and may not be altered or reproduced without the prior written consent of Cabana. The opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.  

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Commonly used index/benchmark definitions:  

All indices and categories are unmanaged and an individual cannot invest directly in an index or category. Index returns do not include fees or expenses. Benchmark indices will likely materially differ from Cabana’s portfolio strategies. Detailed information as to how the returns are calculated can be obtained online from the following link: https://thecabanagroup.com/disclaimers/performance-reporting-methodology/. 

Morningstar’s Moderate Target Risk index  follows a moderate equity risk preference and is based on well-established asset allocation methodology from Ibbotson Associates, a Morningstar company.  

Morningstar’s Tactical Allocation category includes portfolios that seek to provide capital appreciation and income by actively shifting allocations across investments. These portfolios have material shifts across equity regions, and bond sectors on a frequent basis. 

The S&P 500 Index is a market-capitalization weighted stock market index of 500 widely held large-cap stocks often used as a proxy for the U.S. stock market.  

The Russell 2000 and 3000 indices are market-capitalization weighted stock market indices that include, respectively, 2000 and 3000 of the most widely-held stocks and are often used as proxies for the U.S. stock market. 

The Nasdaq Composite Index is a market-weight capitalization index that covers more than 3,000 stocks listed on the Nasdaq Stock Market. What is the Nasdaq Composite, and What Companies are in It? | Nasdaq