Navigating Today’s Market Realities

Investors face a complex landscape: cash and short-term bonds offer modest returns that, after taxes and inflation, do not currently keep pace with rising living costs. For example, a 4.2% Treasury Bill, when taxed at 35% and adjusted for 3% inflation, loses 0.3% per year[1]. 10-Year and 30-Year Treasuries yield 4.3% and 4.4%, so they are in the same boat. The S&P 500 has a YTD Loss of 5.45%[2] after seeing a steep drop and an equally steep bounce in early April. Investors can look overseas, but that’s not a sure thing at all. It seems like there is nowhere to run and nowhere to hide. It’s one thing to know in the brain that stocks, while more volatile, have historically outperformed other asset classes over the long term; it’s another thing entirely to have the stomach to focus on underlying business value rather than rapid market swings.

Long-Term Focus

Focusing on the day-to-day volatility can often lead to frequent trading. Even when done successfully, frequent trading can erode returns through higher taxes and transaction costs. By focusing on long-term investments, investors benefit from lower capital gains tax rates and the compounding effect of reinvested earnings.

Most people aren’t successful traders; they repeatedly buy high and sell low, losing money at every turn. Even if the investment does well, the investor gets hammered because he is in and out at the wrong times.

Staying Vigilant and Seeking Opportunity

Our portfolio manager is closely monitoring market developments. We recognize that market volatility and turmoil can create compelling buying opportunities for those prepared to act with discipline and patience. As Jeff Muhlenkamp recently shared, it’s critical not to rush into what appears to be a bargain, but instead to focus on companies with sustainable cash flows, strong balance sheets, and durable competitive advantages[3].

“Market volatility and turmoil create buying opportunities. When the market goes down, you have to be prepared to buy but also be a little patient… It’s easier on your psyche to be late, rather than early. If you miss the precise bottom but you catch it on the upswing, the good news is once you’ve got back in, you’re generally going to see positive results.” Jeff Muhlenkamp

Supporting Clients Through Uncertainty

We understand that navigating an uncertain world is challenging for investors. Our client service team is dedicated to answering your questions, reviewing your financial plan, and ensuring your investment strategy remains aligned with your long-term goals. Whether you’re concerned about inflation/recession, market volatility, or specific portfolio holdings, we’re here to provide guidance and support.

Successful investing requires vigilance, patience, and a steadfast commitment to the long term. At Muhlenkamp, our team works hard to find quality investment opportunities while helping clients weather uncertainty and stay focused on their financial objectives. If you have questions or would like to discuss your portfolio, please reach out to our client service team—we’re here to help.

The opinions expressed are those of Muhlenkamp and Company and are not intended to forecast future events, guarantee future results, or offer investment advice.

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