Wright Cove Capital: October 2024

October 2024

Heading into 2024, the consensus of Wall Street analysts predicted low-to-moderate stock market gains. However, the S&P 500 has surged 22% year-to-date, surpassing even the most optimistic forecasts.

This underscores the challenge of predicting short-term market movements. Despite expert opinions and investment theories backed by data and financial models, the future path of markets remains uncertain.

As we approach the upcoming election, the same pattern persists. Experts offer various predictions, but the actual outcome remains unknown – and may be unknown for days or weeks following Election Day.

Our focus at Wright Cove Capital remains on what we can control: positioning portfolios for optimal risk-adjusted returns and meeting each of our clients’ unique financial goals.

In the face of rising inflation, we prioritized high-quality, large-cap domestic growth stocks with strong balance sheets and pricing power. These strategies have matched or exceeded the broader market without taking excessive risk. There was a short period this summer when unprofitable growth and small-cap stocks outperformed, but this move was short lived and has since reversed course as interest rates have backed up. We continue to prioritize quality over other factors but have begun rebalancing and diversifying portfolios where appropriate.

In fixed income, we remain overweight short-term maturities and T-bills. Our cautious approach has paid off recently as longer-term bond yields continue to rise (when bond yields rise, prices fall) despite recent Fed rate cuts. This rise may be attributed to concerns about the economy and labor market being stronger than anticipated and growing fears of the ever-expanding federal deficit. Neither Presidential candidate has shown much interest in addressing the federal deficit and the bond market is finally taking notice – anticipating larger deficits and increased supply to fund lofty election promises.

Looking ahead we have little doubt that the upcoming weeks will see increased market volatility. In addition to the elections, there are numerous key economic data releases and quarterly earnings reports from the largest companies in the S&P 500.

We’re prepared to navigate this volatility and capitalize on opportunities when presented.

Our commitment to understanding and achieving our clients’ goals remains unwavering.

As always, if you have any questions or concerns – or believe someone you know would benefit from working with Wright Cove Capital, please feel free to reach out.

Regards,

Eric and Cass

Eric Leinwand, Principal – Eric@wrightcovecapital.com

Cass Tokarski, Principal – Cass@wrightcovecapital.com

The themes and strategies that we speak about and the positioning we take in portfolios are all customizable to best reflect each of our clients’ own unique goals and should not be interpreted as general investment advice.