Todd Talks: February 2024
Introducing “Todd Talks” – your exclusive monthly insight into market dynamics and investment strategies, curated by Todd Walker, Senior Portfolio Manager at Hutchinson Family Offices.
The market continues to be led by a few stocks, most of which we own in our portfolios. We rebalanced at the start of the year and cut our equity positions by a modest amount. We were sitting and continued to hold a higher level of cash than our normal portfolio allocations. Most of the portfolios held 9%‐12% cash for most of January. I added a position (BUFR) to the portfolios near the end of January. This position is an actively managed ETF that offers exposure to a laddered portfolio of 12 target outcome 10% buffer ETFs that are based on the returns of the S&P 500 (SPY). This fund seeks to offer upside return and downside protection in volatile markets. I expect it will effectively lower the beta in our portfolios while offering upside potential. For example, the 2023 return was 19.81% compared to the S&P at 24.23%; in 2022 return was ‐7.67% compared to the S&P at ‐19.44%.
In January, when the market hit an all‐time high, the markets did something they had not done since October 20, 1987, the day after Black Monday. On this day, there were twice as many stocks in the red (negative) as there were stocks positive for the day. This is an example of the imbalance we are currently seeing in the markets, where just a few stocks are accounting for much of the growth. The magnificent 7 accounted for 45% of January’s S&P 500 return. Ultimately, there were not even 7 stocks because Apple and Tesla were negative for the month.
I believe the Nasdaq is currently overbought, and it will not be unexpected to see some correction. We continue to do what we can to participate in the market’s growth while still trying to be defensive when we can.
I have continued to buy notes weekly. We are receiving between 9%‐10% on these notes. It is getting harder and harder to get good pricing with the VIX at 13.00.
As always, don’t hesitate to contact me at todd@HutchinsonFamilyOffice.com with any questions!
Talk next month,
Todd
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This information is for educational purposes and is not intended to provide, and should not be relied upon for, accounting, legal, tax, insurance, or investment advice. This does not constitute an offer to provide any services nor a solicitation to purchase securities. The contents are not intended to be advice tailored to any particular person or situation. This information may include opinions or forecasts, including investment strategies and economic and market conditions; however, there is no guarantee that such opinions or forecasts will prove to be correct, and they also may change without notice. Securities are offered through registered representatives of The Strategic Financial Alliance, Inc. (SFA), member FINRA, SIPC. Advisory services are offered through registered investment adviser representatives of Strategic Blueprint LLC. SFA and Strategic Blueprint are affiliated through common ownership but otherwise unaffiliated with Hutchinson Family Offices.
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