1st Half Market Outlook Recap from Live Stream

On January 26, we live-streamed our 1st Half Market Outlook, titled, “How will Inflation and Recession Impact My Retirement Planning? 1st Half Market Outlook Summit 2023.” In this episode, we recap the highlights of the live stream and Chris comments a bit on what was discussed. Here’s the link to the live stream:

Beginning the Outlook:

Chris: Hey, I’m Chris Perras Chief Investment Officer, Oak Harvest Financial Group here in Houston Texas, and welcome to this week’s podcast, Keeping You Connected To Your Money. I’m going to do something a little different this week. Last week, our investment team here had our first half market outlook summit and we live-streamed it. It was Troy, myself, and the newest member of our team, Charles Scavone. What I want to do here is break that one-hour video down into six segments. When you watch it, if you want to you can fast forward to the segment you want to focus on. For the first 10 minutes or so, Troy and myself we did a recap of what happened in 2022.

If you watch these videos, I hate the word unprecedented. Well, 2022 pretty much was. So it was the first time in almost 90 years that the 60-40 portfolio had just a horrific year. It was the worst year since 1937 and it was the first time really since 1931 when both stocks and bonds were down materially both. There was no ballast to the bond market. We spent about 10 minutes walking through that. Posted a really great table from Charlie Bilello and if you want to see that, go ahead and fast forward you can look at that or you can go back and watch the first half market outlook that we wrote in December and we published in early January.

The second part of our video, Troy and I spent a long time talking about the components of inflation. There’s a goods component that peaked last June and has dropped dramatically auto prices, car prices, used car prices, commodity prices all those hard goods that you buy at the supermarket are even coming down. Go to Target there’s lots of sales. Talked about that. We also talked about the component of inflation that’s the service component which is what the fed’s looking at. That’s wages and home prices, rental prices, the housing component. That’s been slower to react, the fed is focused on that, It is coming down more slowly because companies, they don’t like to hire really fast and fire really fast.



They move more slowly, you probably watched TV lately and seen all the tech layoffs that have been announced. We did a video about a week ago, and asking and answering the question, “Why are stocks going up when all these tech companies are announcing tens of thousands of layoffs?” If you get a chance, click on that video, go ahead, and watch it there’s some really good interesting information there. We also talked about in that component the real interest rates. I’ve done a lot of videos over the past couple years. When you own a treasury bond, you get paid some interest. That’s the nominal interest rate. It equals the inflation rate, plus the real interest rate.

Troy and I spent a good portion of the video talking about real interest rates and the reason real interest rates are important to you is because that’s the main driver or one of the main drivers of the PE in a stock market. Yes, your bonds that you own and how those move around that actually is affecting the price of equities because it’s affecting the valuation premium that investors pay. What you want to see is you want to see that real interest rate component, whether it’s the 2-year or 10-year or pick your timeframe start to come down.

It trough in November of 2021, which is pretty much exactly when the stock market peaked and it ran up all the way to about October of 2022. Lo and behold that’s right when the stock market has made its lows so far for the last year and a half. That was the second component we talked about. The third component, we started to talk about retirement planning and how your investment portfolio isn’t a retirement plan. The goal and focus at Oak Harvest is to totally encompass your retirement plan. It’s to look at your investment portfolio. It’s to look at the taxes you pay, it’s to look at social security, it’s to look at Roth planning, it’s to look at estate planning.

All sorts of factors that move around, not just the portfolio performance. We have financial planners in the background who are running, they’re almost quants. The plug in your investment portfolio, whether you own real estate or stocks and bonds or other types of investments, they’ll plug those into their models and they’ll stress test it. As a portfolio manager, I might not be able to comprehend the 1 in 1000 event that happens but these models do. They factor in the stock market going down 35% in a year peak to trough and bonds going down as well like they did last year.

They give you a score and hopefully, that gives you a little bit of peace of mind that even in the worst-case scenario, you retire at exactly the wrong time and the markets go down exactly after you retire. If the plan is holistic and it’s done properly, you should have some comfort that you’ll be able to manage your retirement because you have cash when you need it in the future. We talked about that for probably about 10 minutes or so. Then we moved on to more micro and what we thought as far as sectors and groups, what would outperform in the first half.

We answered some of our viewers’ questions. Some of our client’s questions. We had a couple of questions on material stocks, on precious metal stocks. We’ve done a couple of YouTube videos in the past about gold and silver. Talked about how they aren’t inflation hedges, but they are currency hedges. Talked about some of the infrastructure stocks that we might own or we do own that might be beneficiaries in a rebuilding here in the United States, or maybe even a rebuilding in Europe, had of viewer ask us about how do you play a rebuilding of Ukraine if and when the war over there ends?

We alluded to some groups and stuff. We didn’t talk about any specific stocks because we tried to stay away from that but there are ways to play that to invest in that, sorry, I hate the term play because it’s not a plaything. Your money isn’t something to play with. It’s something you invest. It’s not gambling. The stock markets are not gambling. We’ve discussed that in the past as well.



The final area that we talked about was we introduced our newest team member, Charles Schiavone. Now, Charles is a longtime business associate of mine and friend of mine. We’ve worked together twice previously. We did a video about a week ago introducing him to everyone out there on the internet. We’re just pleased to have him on board. He’s one of the best money managers that I know. His focus has been a lot on growth stocks and emerging growth stocks.

Later on his career, I had forgotten that early in his career, he was a bond guy, which I was actually a bond guy in my first career in finance. He came up analyzing credit markets. Worked for one of the banks here in Texas that was eventually bought by JP Morgan. Then our paths crossed at Van Kampen American Capital. In the mid-’90s I left to go to San Francisco, he left to go help turn around to fund over at AIM. Then he hired me, and was basically my boss for three or four years.

We launched some new products. We turned around the performance of the funds that he had been put in charge of, improved a lot of the performance in those mutual funds, as well as launched some new products and services into the market that had never been done before. He was instrumental in launching a product that went from essentially 0 in assets to 3.5 billion in assets in about 2 or 3 years with great performance as well. That’s what we covered in that hour. It’s on the internet. It’s on the live stream, it’s on YouTube. Go click on it. You can fast-forward to the part you want to see.

We do it every six months. We’ll probably be doing it again in late June, early July. Before then, we’re going to do the monthly segments Troy and myself or Troy and some other advisors to take up topics that are on the minds of our clients, on the minds of you. We’re always thinking about what we can do to better serve our clients as far as service, investment performance, and just continue to communicate to calm your nerves down because we all know that retirement can be a very stressful period of time. You’ve worked for years and decades, usually, you’ve saved money.

You’re used to having cash flow come into you and now you’re in retirement and you don’t have that income stream from your salary. You’re reliant on your savings, you’re reliant on dividend stocks to maybe pay you some income, social security, maybe insurance policies that pay you a little income along the way too. We look at all of that holistically here at Oak Harvest because we look at financial planning. We’re not just an investment manager, we’re a financial planner. Our job is to help you improve upon your retirement and help you meet your retirement needs and maybe some of your greeds too. That’s one of my favorite sayings around here. Some people said we should get some t-shirts made up.

I’m all in favor of that. I won’t even take a royalty. At Oak Harvest, we think our clients are best served by us helping them plan for their future needs instead of focusing on the past. We all know the future is always uncertain, particularly in the stock markets. That’s why our advisors and retirement planners plan for retirement needs first. We also throw in some greeds in there too just in case you want to take an extra trip maybe travel around the world or buy a boat or something like that.

We model that into your retirement plan. Give us a call here in Houston, ask to speak to an advisor, the phone number 877-896-0040, and schedule an appointment with one of our advisors. We’re here to help you into and through your retirement years. I’m Chris Paris from the whole team Troy, Jessica, Charles, myself, James, everyone, have a week.