April 2023
The Ratio Wealth Group Team welcomes a change of seasons and hopes spring brings
each of you a resurgence of growth at every level. Budding changes that come in April
are evident here at Ratio as well. Please take a moment to view our updated website at:
RatioWealthGroup.com. In the spirit of progress, we have added some very talented
individuals to our crew. Ratio is committed to meeting your needs at every planning and
investment turn.
While only in his first week on the job as our new Chief Operating Officer, please welcome
Josh Freedman, CFA ®. Ratio recognizes the importance of best-in-class systems and
redundancy to protect the institutional quality experience you have come to expect. Josh
strengthens our group multidimensionally as he has ample COO credentials with several
investment firms and has institutional research/portfolio management experience. Josh
and I worked together earlier in our careers and we are thrilled he is part of our future.
Nancy Kimball comes back to us after some time away managing her own business, family
affairs and the logistics that come with having a teenaged son. She really is the nucleus
of our organization and is available to coordinate any needs you may have of our team
members.
For updated bios and work history for all our employees, please visit the Team link on the
website. I look forward to each of you getting to connect with the newest members of
the Ratio family.
April 2023 Commentary
In January, I wrote about the 2022 market chaos that occurred across all asset classes.
We believe that a reset in the equity market began last fall based on the drastic multiple
contraction that occurred. We are still waiting to see where future earnings estimates
shake out. This will determine the forward valuations investors are willing to pay for
stocks. While it’s been a bumpy ride, equity markets are up low-double digits and the
bond market is up mid-single digits since the middle of October 2022. Clarity around the
outlook for investable assets should arrive towards the middle of the year, with an eye to
growth in 2024. A combination of bottom-up fundamentals for corporations and macro
constraints based on policy shifts will determine the next directional trend.
The work done by the Fed to battle inflation is almost done, with an unforeseen assist
from the Silicon Valley Bank repercussions. A pause to rate increases should be pulled
forward as banks rein in lending to stabilize their internal financial conditions. We do see
inflation abating in the back half of the year, but this will create further economic anxiety
as unemployment will likely rise (off historically low levels). The increase in
unemployment, coupled with general slowing dynamics for the economy, should create
later-cycle opportunities in the markets.
Market confidence is always the creator of chaos and near impossible to model. Based on
this premise, and a greater sensitivity to not “overpaying” for stocks, portfolio positioning
has not drastically changed. Our bias remains to favor value-centric allocations with
balance sheet strength being an important factor. A result of this bias is a tilt towards larger, global corporations that tend to pay dividends to shareholders. We have stated
before that future leadership for equities may not look like what boomed in a low interest
rate landscape. While growth equites, particularly technology have rebounded in 2023,
equites with value characteristics are still outperforming over the last twelve months. We
remain cautious to chase growth until confidence in the direction of profits becomes
clearer.
In late February, most of you also saw a modest increase to fixed income allocations. We
alluded to this adjustment in our January note. With rates recovering, slight adjustments
to increase bond allocations were warranted. High credit quality and shorter duration
holdings remain the target.
We look forward to coordinating a time to review your portfolio and any planning topics of
importance.
With gratitude,
Derek
