Despite August historically being one of the worst months for stock markets, the S&P 500, Nasdaq, and Dow all reached new all-time highs last month. The S&P 500 was up 3% – the largest gain on record during the month of August – led by Large Cap Growth Stocks (up 3.6% in August). The August performance of the Radius 100 portfolio was in line with the S&P500, while the Index 100’s performance was slightly dampened by its position in Small Caps (up 2%) and the Dow (up 1.4%). The Balanced Risk Portfolios had positive returns for the month, but the returns were dampened by rising interest rates (and falling bond prices). August economic data pointed to an economy that, while past the peak rate of growth, is still expanding. Inflation fears remain however, and the Vanguard US Total Bond Index was relatively flat for the month on the back of a 5.4% year-over-year inflation reading for the month of July (the latest data available).
September is historically the weakest month of the year for stocks. As such, the current stock market rally may come under pressure from ongoing concerns around the Delta variant of Covid-19 and a highly anticipated Federal Reserve meeting that could spell out the end of pandemic-era monetary stimulus. While the Delta variant continues to pose a risk to the global economic outlook, for developed economies such as the US this is more likely to be in the form of supply constraints rather than further lockdowns. For the markets, August’s economic data seemed to confirm that the easiest part of the reopening is now behind us. We are somewhat optimistic in our outlook for stocks at this time, but remain cautious – particularly towards bonds and inflation. As always, we recommend that investors remain prudent. The best way to protect from long-term investment declines is to diversify one’s investments across multiple, uncorrelated asset classes and investment strategies. Attempting to “time the market” is seldom a successful strategy and we would not recommend you do so.