Diversification: The Only “Free Lunch” Doesn’t Feel So Free Right Now
The best performing strategy year-to-date has been to own the few high-flying stocks that are responsible for the majority of U.S. stock market returns. Against this backdrop, we feel it is an appropriate time to review Daintree’s investment strategy and why we think it has a higher probability of long-term success.
Things rarely play out the way people foresee them. Take the FIFA World Cup for example, which recently concluded its 21st installment. The tournament began with 32 national teams vying for soccer’s ultimate prize, with tournament stalwarts Germany, Brazil, or Argentina favored to lift the trophy again. Against all odds though, each of these favorites crashed out, eliminated by seemingly lesser teams. No one could have predicted this result or that the tiny nation of Croatia would make the final. However, that is the nature of a contest with numerous potential outcomes; it is unpredictable and full of surprises.
In June Daintree employees participated in the J.P. Morgan Corporate Challenge, a series of races held in 13 cities across the world. Over 340 companies participated in Boston’s race benefiting The Every Child Fund at Boston Children’s Hospital. Our runners were proud to represent Daintree in this great community event.
Daintree employees enjoyed attending the 36th annual Jimmy Fund Scooper Bowl,® the nation’s largest all-you-can-eat ice cream festival. The Jimmy Fund supports Boston’s Dana-Farber Cancer Institute for adult and pediatric cancer care and research. This year the Scooper Bowl raised more than $400,000!
A historic era is over. For 18 months prior to January of this year, the S&P 500 experienced zero pullbacks of 5% or more. This might not sound impressive in and of itself, but put in historical perspective, this was a period of extremely low volatility. In a normal calendar year, the S&P 500 typically experiences five pullbacks of 5% or greater and one pullback of 10% or greater. However, for an extended period markets confounded this norm as asset prices experienced unabated appreciation. At the beginning of this 18-month period, a reasonable investor would assume seven or eight sizable equity market pullbacks, yet equity markets experienced none.
Daintree Advisors is pleased to announce that Barbara Attardo, Darlene Dahl, Lauren Desforge, Alex Gross, and Mary Shahian have been named recipients of the 2018 Five Star Wealth Manager award as featured in Boston Magazine. To receive the award, wealth managers must meet 10 objective criteria evaluated via surveys of Boston area households and financial services professionals, as well as independent research. Five Star Professional, which sponsors the nationwide award program, published its list in the February 2018 edition of Boston Magazine.Wealth Managers do not pay a fee to be considered or placed on the final list of the 2018 Five Star Wealth Managers. The Five Star award is not indicative of the wealth manager’s future performance.
Are you unfazed by the markets’ lofty valuations? Equity markets do not seem too fazed by much of anything. No matter what disaster or uncertainty came our way during 2017, global equity markets (MSCI ACWI) were up in each month of the year. That is a remarkable result and a measure of calm in the face of extreme political drama, international terror, policy changes, North Korea’s nuclear threat, cyberattacks, hurricanes, wildfires, etc.