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Reliving the Same Thing Over and Over: Market Commentary from Cabana’s CEO – August 10, 2021

3 years ago

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For those of you who have seen Groundhog Day (one of my all-time favorite movies), you know what I mean when I say it feels like we are all living the same thing over and over again. Four months ago, I wrote of seeing us all put COVID and the unbelievably difficult year of 2020 behind us. I discussed the resumption of a cyclical bull market, which began last November on the hopes for a vaccine, a return to work and travel, a return to sports and concerts, seeing friends and taking our family to dinner. A return to life as we all knew it. 

And then I woke up.  

It’s not a new day after all, but rather just more of the same. Hospitals full of sick patients. People dying. Angry and blustering politicians on both sides pandering to those who might elect them again and keep them on the gravy train that is our Congress. One segment of America pitted in a battle to the death (literally) with another. Neighbor vs. neighbor. Vaxxers vs. anti-vaxxers. Masks and more masks. 

My daughter is having my first grandchild this week and neither my wife nor I will be there… hospital protocol. Only one visitor is allowed in the room, and that will be her husband (as it should be). My son is going back to college to begin his sophomore year…but it is not college, at least not like the college I knew. No classrooms full of kids. No tailgating. No being really free – a little bit free, but with masks and vaccination records on hand. I feel bad for him and all our kids who just got stuck in this mess. I feel bad for all of us.  
 
The stock market is stuck too. After all, it is only a reflection of ourselves. It now knows what we all know. The bond market saw it first, but it is now obvious to all. We are right back in the same place we were a year ago. We need vaccines, more and better vaccines, which, of course, come with their own issues as I mentioned above. Without a medical solution we are left with herd immunity the Darwinian way,. tThe way of the Spanish flu pandemic of 1918-1920. The virus spreads and people die or survive until the weak are gone and the virus can find no further willing host. An estimated 50 million people across the world died then and 675,000 of those were Americans. Eventually us humans prevailed – perhaps even a stronger human race was realized, but at such a cost.  

Hopefully medicine and sound policy, coupled with cooperation among nations will reduce that cost and the dead won’t number 20 or 50 million. Right now, 4.3 million people have died of COVID, 617,000 Americans. Almost exactly as many of us have now died as did on our shores in that historic time, and we perhaps are not close to the end. Those numbers put things in perspective. 

So… back to the stock market. We will move higher when we all move higher. The longer we can tread water near the major indices’ highs, the better our chances of avoiding a long overdue correction. Much like the rest of us, the market is buying time. Unfortunately for us humans, we don’t get that time back.  

P.S. For those who have not seen Groundhog Day, go watch it. We all deserve a little break and that might do the trick. 

Disclaimers

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.  

“CARA” is Cabana’s Cyclical Asset Reallocation Algorithm. Scenes assigned as per the judgment of The Cabana Group. Scene names and number of scenes have changed over time in an effort to obtain efficiencies and provide clarity of investment objective. 

This material may contain ‘forward looking’ information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for a particular client. The information provided here is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation. Investment involves risk including possible loss of principal.  

Cabana LLC, dba Cabana Asset Management (“Cabana”), is an SEC registered investment adviser with offices in Fayetteville, AR and Plano, TX. The firm only transacts business in states where it is properly registered or is exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Additional information regarding Cabana, including its fees, can be found in Cabana’s Form ADV Part 2A or Form CRS. A copy of which is available upon request or online at www.adviserinfo.sec.gov/. 

Past performance is no guarantee of future results. All investment strategies have different degrees of risk and the corresponding potential for profit or loss. Asset allocation and diversification will not necessarily improve returns and cannot eliminate the risk of investment losses. “Target Drawdown” is merely a descriptive term used to describe the general strategy and objective of the portfolio, it is not a guarantee, nor should it be construed to suggest safety or protection from loss. There is no guarantee that portfolio performance will remain consistent with the targeted drawdown parameter. While risk tolerance and targeted “drawdown” are identified on the front end for each portfolio, Cabana’s algorithm does not take any one client’s situation into account and there is no guarantee that Cabana’s strategies will be suitable for any investor. Investors and advisors should not simply rely on the name of any portfolio to determine what is suitable. It is the responsibility of investment advisors to determine what is suitable for their clients. Cabana manages assets on multiple custodial platforms. Performance results for specific investors will vary based upon differences in associated costs and asset availability.  

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All recommendations made in the prior 12 months are available upon request. Cabana’s allocation history is available here. For additional information regarding our services, including performance disclosures and award methodology, please visit https://thecabanagroup.com/disclaimers/. 

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