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The DDK Group

News & Insights

Q2 Review & Outlook Thumbnail

Q2 Review & Outlook

The latter half of 2020 and the first quarter of 2021 saw a fairly clear rotation toward a higher, long-term interest rate environment; or at least the expectation of such. We saw in the second quarter an appetite for traditional value stocks, as well as small caps over large cap, reverse once again as treasury yields fell and bonds rallied, while the headline growth stocks re-established their leadership. Fans of the FAANG names, bolstered by re-opening economic metrics, pushed these megacaps to all-time highs, while the industrial and financials names were either flat or retreated slightly. Real estate (+13.1%) and energy (+11.3%) bucked the growth bias and had returns in-line with Technology (+11.6%). International equities continued their positive performance, though still struggling to keep up with US equities, were no doubt hurt both by dollar strength and a slower re-opening trade. Despite the most recent moves in bonds, we continue to favor shorter duration fixed income as we believe short-term moves in interest rates are transitory and that the Fed is likely to move short-term rates closer to its policy rate over the next eighteen to 24 months. We encourage our clients to be at or near their strategic allocations while keeping short term cash needs available in cash or short-term fixed income.

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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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