Despite the carnage seen over the first four months of the year in equity and fixed income markets, the month of May did not provide investors much relief as markets continued to decline even further during the month. While there was a small rally to end the month of May, on the year the S&P 500 is still down -13.41% with the Bloomberg Barclays Aggregate Bond Index down -9.24%. As noted in last month’s commentary, this continues to be the worst start to any calendar year for equity markets in the last 81 years. Not to be outdone though, this is the worst stretch of performance for fixed income markets in over 100+ years – and no, that isn’t a typo. In addition to the performance of financial markets, most Americans continue to see continued inflationary pressure whether it be at the gas pump, where the U.S. average cost for a gallon of gas is now $4.71, or at the grocery store, with the cost of a single egg, not a dozen, closing in on $1.00.
In the face of all these financial and economic lemons we have been given, it is our job to turn those lemons into lemonade. There are three ways with which we have been squeezing the most out of those lemons to benefit out clients – tax-loss harvesting, performance that continues to outperform the broader markets, and portfolio changes over the coming weeks. With the current market conditions, we have been aggressively tax-loss harvesting for our client portfolios to lock in future savings while remaining fully invested. Secondly, due to our significant underweight to traditional fixed income, our portfolios are outperforming their benchmarks over the course of the year. Finally, we are making some significant changes to the allocations within our portfolio because of the market dislocations thus far this year.
