Rebalancing Update

Greetings Clients and Friends:

We have just finished reviewing your portfolios, and we have placed more trades than usual. First, we took advantage of the small drop in the markets this week to invest cash. We love sale prices; they help us make you more money. Second, we trimmed the small and mid-sized US company funds that have done so well over the past three months (up 22.7% and 14.1% respectively) and rebalanced. Sell high, buy low. Third, we liquidated nearly all of the remaining positions in the funds that we decided to replace back in November. Our patience has been rewarded: both Oakmark International and FPA Crescent have appreciated more than 11% in the last three months. We held onto a few small positions in some taxable accounts to avoid short-term gains.

We remain focused on the pandemic’s effect on our economy and markets, and amazed at its uneven impact. Stocks appear expensive to us, but investors are aware of the risks from deficit spending, and inflation is still wishful thinking. In addition, the Federal Reserve has made clear the tools at its disposal and its willingness to employ them as necessary. 

There is always a risk that markets will decline, but there is also always a risk that we will miss out on a continuing rally. Ultimately, we take comfort that we have the benefit of many years before we will spend our last dollars; please keep us updated on your short-term cash needs. Our money is invested right alongside yours.

Sincerely,

John H. Biebel, J.D., CFP®