#163 Why We Have A Conservative Portfolio Strategy

The markets react to a Fed surprise

This is a big week as a lot of Fed governors are speaking. Last week the Fed gave us a big surprise on Wednesday with a very hawkish statement saying that the June meeting will be live (They will discuss raising interest rates). When this happened last December, the markets fell 12%. The fed is trying to test the markets. This is one reason we are staying with our conservative portfolio strategy. Years ago, people asked the Fed to share more information and now they may be sharing too much.

Live Fed meeting in June

They are making this a live meeting because wages are increasing and inflation is getting closer to their target which is 2%. The numbers may not be where the Fed believes they are. Earnings have gone down since last year for the second year in a row. This is very unusual. If earnings drop down, historically stocks do not go up. The numbers have to add up to show that the economy is growing. This is another reason we are keeping our conservative portfolio strategy.

A huge drop in expectations

We are seeing that not only are earnings coming down, but also expectations are coming down. We started the year at 130 in expectations with the S&P 500 and now we are at 118. That is a huge drop and it will be hard to go up from that point. Yet, another reason we are staying on course with our conservative portfolio strategy.

Why earnings have dropped

One of the reasons for the low earnings is that right now it is hard for companies to price products domestically and raise prices. Because the prices are so out of whack, it is hard to price products internationally too.

We are staying conservative in our portfolios

This is why we are holding to our conservative portfolio strategy. Now that bad earnings are in the rear view mirror, we are looking at a very unaccommodating Fed in front of us. There is a lot of information that is all over the board. We are going to stay on top of it for our clients and keep you updated.


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Greg Powell, CIMA
Wealth Consultant
Email Greg Powell here

Ashley Page, JD, MBA
Senior Vice President
Wealth Consultant
Email Ashley Page here

Bobby Norman, CFP®
Vice President
Wealth Consultant
Email Bobby Norman here

Trey Booth, CFA®
Vice President
Wealth Consultant
Email Trey Booth here

Fi Plan Partners is an independent investment firm in Birmingham, AL, serving clients across the nation through financial planning, wealth management and business consulting. Fi Plan Partners creates strategies in the best interest of their clients using both fee based investing and transactional investing.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

Economic forecasts set forth in this presentation may not develop as predicted.

No strategy can ensure success or protect against a loss.

Stock investing involves risk including potential loss of principal.

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