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The DDK Group

News & Insights

You Do You Thumbnail

You Do You

Why do we care what other people are doing with investing? Why do we look to financial TV for advice on what we hold? Why don’t we just focus on playing our own game?

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Q1 Review / Q2 2021 Outlook Thumbnail

Q1 Review / Q2 2021 Outlook

The strong performance of equity markets that closed 2020 continued through the first quarter of 2021 with outperformance by value and cyclical stocks. Fiscal stimulus of over $3T finding its way into the economy provided the fuel for a continued appetite for risk assets. The strength in bonds experienced in 2020 reversed in 2021, as the Barclay’s Aggregate Bond index lost 3.4% and the 10-year Treasury yield rose from less than 1% at the start of the year to close the quarter at 1.74%. The combination of even more fiscal stimulus when paired with an accommodative Federal Reserve provides a sturdy short-term tailwind for risk assets. We continue to recommend that clients stay at or near their long-term strategic asset allocation.

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2021 Winter Digest Thumbnail

2021 Winter Digest

Many of us are happy to leave 2020 in the rearview mirror. Last year, the COVID-19 pandemic touched nearly every facet of our lives, roiling societies across the globe, devastating economies, and challenging us in ways we have not experienced before.

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FOMO (Fear of Missing Out) Thumbnail

FOMO (Fear of Missing Out)

“Can I keep everyone focused on the big picture and their true financial objectives in a get rich quick environment that’s turned the markets into a 24 hour virtual casino?” – Downtown Josh Brown My friend Josh Brown celebrated his 44th birthday on February 25th (Happy birthday Josh) and he wrote that sentence on his blog. It got me thinking about myself, the markets, Baird’s clients, and how we’ve entered this weird World where NBA highlights are selling for thousands of dollars and lines of computer code are worth $50,000 a “coin”.

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Q4 Review / Q1 2021 Outlook Thumbnail

Q4 Review / Q1 2021 Outlook

No one could have predicted the events of 9/11, the Great Financial Crisis, nor COVID-19’s dramatic effects on the economy and markets. Yet what is predictable is that such shocks can occur and do occur. Against such backdrop, it is helpful to think of the following from Mike Antonelli’s recent posting: ”So how am I thinking about 2021 and beyond? Here is my framework: - Continued bounce in employment and GDP growth from crisis low levels as we inch back towards normalcy. - Housing remains a considerable tailwind as Millennials trickle into home ownership over the next decade spurred by population migration and low rates. - Demographics are favorable right now, 80mm millennials are entering the prime of their lives. - The vaccine will finally reach critical mass sometime around Q2 setting the economy up for potential supernova of growth, 5-8% annually over the next few years, as people absolutely FLOOD out of their homes. I don’t want to get delivery for the next few years and I’d be happy seeing every single Baird branch in person. - The Fed is still easy and committed to such, do you realize how important that is? - The potential is there for a “roaring 20s,” I just hope its “roaring” for everyone (and that prohibition doesn’t come back).” Though Mike has an air of levity in all of his posts, a focus on such broad economic and market tailwinds has us continuing our view that clients should stay invested at or near their long-term strategic allocations with sufficient cash to meet short term obligations over the next year or so.

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Q3 Review and Outlook Thumbnail

Q3 Review and Outlook

The third quarter allowed us all to breathe a sigh of relief. That said, until the virus is under control, challenges remain. Our friends and partners at Strategas summed it up this way: "The easy part may be over. Outside the theatre of war, few things have been as universally negative as the COVID-19 pandemic and its effect on the global economy. We avoided a depression thanks to a swift and aggressive policy response. It wasn’t surprising to see a rebound off such low lows as the economy reopened, and third-quarter GDP is expected to be up 25% from the previous quarter. But as our chief economist Don Rissmiller has suggested, the easy part of the recovery may be over. COVID-19 follows us into Q4. The pandemic persists as we approach the fourth quarter, and we think it’s fair to say that society as a whole is learning to live with the virus. But in the absence of additional income replacement provisions or durable drivers of organic growth, we should expect the slope of economic recovery to soften. And with the Fed’s recent acknowledgement that monetary policy is likely to remain easy for years to come, we are likely to see more disparity between the rise in stock prices and the rate of economic recovery.” It would be hard not to overlay the upcoming national elections as a further factor that could weigh on stocks. While the historical evidence suggests that the outcome of such elections has little correlation to the performance of the equity markets over any appreciable look back period, the ride may be rough in the short-term given this particular election and it being conducted during a pandemic. However, the volatility may present opportunity. It is against this backdrop that we continue to advise that clients stay at or near their long-term strategic allocations with an overweight to cash to meet near-term needs.

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