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INTRODUCTION

“Invest for the long haul.  Don’t get too greedy and don’t get too scared”
– Shelby M.C. Davis

As we enter 2025, let us take a moment to reflect on the truly amazing investment period that we have just lived through.  The S&P 500 and Nasdaq 100 delivered total returns of ~25% in 2024, following gains of 26% and 54% in 2023 – culminating in two-year returns of 58% and 92%, respectively.

Now that we are feeling good, we should reflect on the conditions that set up such tremendous gains.  2022 was one of the most difficult investment periods of my career.  The S&P 500 lost (-19%) over the year (with a peak draw down of (-25%) from its 2021 high) and the Nasdaq 100 lost a third of its value over the year.  Even bonds offered little shelter, with the Bloomberg U.S. Aggregate bond index losing(-13%), including dividends, and suffering a peak loss of (-17%). [Read more…] about Q4 2024 Investment Letter

INTRODUCTION

“Everybody has some information. The function of the markets is to aggregate that information, evaluate it, and get it incorporated into prices.”                   

– Merton Miller, Economist and Nobel Laureate

At Mountain Vista, we periodically remind our clients that the market is forward-looking and by the time you are reading the latest clickbait article, the stock market has already reflected that information.  With the increased availability of data and the adoption of quantitative, machine-driven trading strategies, the market reacts to new information almost instantly.  In the stock market, information is reflected through a new price. 

While this new technology and market structure present opportunities for very sophisticated trading firms that rely on being a fraction of a second faster than their competition, a typical saver could get themselves in trouble by selling after bad news or buying after good.

The unwind of the Japanese “carry trade” on August 5^th reminded us once again how fast markets move these days.  Over three trading days, the S&P 500 fell (-8%) and the VIX, a measure of expected volatility, reached levels only experienced during crises like the COVID crash in 2020 and the global financial crisis in 2008/9.  In a little over a week, the market recovered all of these losses.  I feel for the folks that turned on CNBC, read a few panicked headlines and hit the sell button. [Read more…] about Q3 2024 Investment Letter

INTRODUCTION

“It was the best of times, it was the worst of times…”
– Charles Dickens

As a financial advisor, I regularly encounter a wide spectrum of market opinions among my clients. On any given day, I might speak with one client who is convinced a stock market crash is imminent, and another who believes we are underinvested in the transformative AI technologies reshaping our economy. While either perspective may prove correct, it is equally possible that both assessments are misguided.

The current market presents a dichotomy. For investors heavily weighted towards large U.S. growth companies, it is a period of remarkable prosperity. Conversely, those focused on international, value, or small-cap stocks might be forgiven for overlooking the fact that we are in the midst of a robust bull market. [Read more…] about Q2 2024 Investment Letter

INTRODUCTION

“Time in the market beats timing the market…”    
– Ken Fisher

As investors, we acknowledge the inherent complexity and unpredictability of financial markets. Humility and flexibility are virtues that serve us well. Even the most seasoned traders hope to be correct only around 60% of the time – a sobering reminder of the challenges we face.

Amidst this uncertainty, two strategies have successfully delivered for stock investors: diversification and patience. By diversifying our holdings across various companies and industries, we mitigate concentration risk and increase our chances of capturing opportunities wherever they may arise. Furthermore, embracing a long-term investment horizon has historically yielded favorable outcomes. [Read more…] about Q1 2024 Investment Letter

INTRODUCTION

“History provides a crucial insight regarding market crises: they are inevitable, painful and ultimately surmountable.”  – Shelby M.C. Davis

The stock market produced stellar returns in 2023!  Let’s raise our glasses in celebration of a great year. 

The market’s strong performance was not anticipated by many 12 months ago.  2023 was yet another reminder that investing is hard and it is best to avoid making emotional changes to your investment strategy during market corrections or periods of euphoria.  Those of us that waited out the volatility of the last two years have been handsomely rewarded. [Read more…] about Q4 2023 Investment Letter