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Weekly Portfolio Update - 7/25/2017

7/25/2017 - Weekly update on 4Thought Financial Group's Separately Managed Accounts for Investors
Strategy Performance Data

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This notification for the week of 7/25/2017 is part of an ongoing series of updates intended to keep you informed about the changes occurring in your 4Thought Financial Group separately managed accounts (SMAs) each week. The information is broken into the constituent model portfolios we use to manage client investment advisory accounts. Please contact your advisor(s) directly for any more in-depth information related to your personal portfolio or for clarification on which models/strategies apply to you. Occasionally we may provide general commentary, as well as planning techniques and ideas. Make sure to discuss with your advisor whether these are applicable to your situation before taking any actions with regards to your financial plan or investment portfolio.

  

Valuation of Investment Methods:

• Liability-Driven Investing (for Bear Markets): Currently fairly valued (on an absolute basis), and it is the most attractively priced of the four method categories (on a relative basis) based on the measured average of our fixed income focused and risk transfer strategies.

• Strategic Asset Allocation (for Bull Markets): Currently overvalued (on an absolute basis), and it is the second-most attractively priced of the four method categories (on a relative basis) based on the measured average of our diversified (primarily stock) portfolio strategies.

• Selective/Concentrated Investing (for Eagle Markets): Currently overvalued (on an absolute basis) and it is the third-most attractively priced of the four method categories (on a relative basis) based on the measured average of our private equity like strategies.

• Opportunistic Investing (for Wolf Markets): Currently overvalued (on an absolute basis) and it is the least attractively priced of the four method categories (on a relative basis) based on the measured average of our hedge fund like strategies.

Perspective and Positioning:

• For all investors: Non-US stocks and private equity continue to lead by year-to-date performance for 2017, with US small cap stocks and US bonds of various types continuing to lag. Emerging markets stocks in particular have significantly extended their gains in the last two weeks. Most stock types globally are slightly to moderately overvalued (expensive), with US large cap growth and emerging markets measured as the most expensive currently, and US mid cap stocks the least expensive. Shorter term and higher credit quality bonds are generally undervalued while high yield bonds continue to be measured as somewhat overvalued. The overvaluation of the Strategic Asset Allocation investing method and global stocks as a whole point to the continued use of a somewhat cautious approach to cash deployment (see below "How Investors Can Take Action" for more info on this).

How Investors Can Take Action:

• For all investors: As always, remember to contact your advisor(s) to notify them if any of the following have recently changed for you: Life circumstances (Family, career, home, business, etc.); Financial goals; Lump sum cash needs; Monthly income needs; Bank account cash balances; Other assets or liabilities; Your attitude towards risk. Significant changes in any of these areas may require a reallocation of your investment portfolio.

• For growth investors: Temporarily reduce the amount of your systematic investments of earned income into your investment portfolio so that the total annual contribution amount is slightly less than your calculated available annual savings (Total earned income, minus living expenses, minus taxes, equals available annual savings). Slightly under-contribute to your investment portfolio and leave a little more cash in the bank than normal. Use a somewhat cautious approach to contributions (not too much) based on current asset and method valuations. Consult with your advisor on this prior to taking action.

• For income investors: Temporarily increase the amount of your systematic withdrawals from your investment portfolio so that the total annual withdrawal amount is slightly more than your calculated portfolio income need (Portfolio income need equals annual living expenses, plus taxes, minus any non-portfolio income). Withdraw slightly more from your investment portfolio and keep a little more cash in the bank than normal. Use a somewhat aggressive approach to withdrawals (not too little) based on current asset and method valuations. Consult with your advisor on this prior to taking action.

 

This information, along with details and actions specific to each 4Thought SMA, is emailed weekly to investors and interested advisors.

To learn more about investing with 4Thought contact us here or learn more about our Investment Methodology here.

Author: Jesse Mackey

Jesse Mackey is the Chief Investment Officer of 4Thought Financial Group, an SEC Registered Investment Adviser (RIA). As head of the firm's portfolio management operations, he provides investment planning and portfolio management expertise to aid affiliated financial advisors and partner firms in servicing their clients. He is also director of the economic theory, research, and publishing conducted at the firm. Jesse earned his MBA from Thunderbird School of Global Management in International Securities Investment, International Development and Entrepreneurship, and his Bachelor’s degree from Colgate University in Economics. He has more than 16 years of experience in the financial services industry. He holds the Series 66 Securities/Advisory license, and is also a licensed life and health insurance representative in several states.

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