As of November 17, 2023, the S&P 500 index is soaring with a hefty 18% gain, while small cap stocks and bonds are trailing behind with less prominent returns. A mere seven stocks are maneuvering more than 90% of the total return in the S&P 500 and NASDAQ.
Beneath the surface, cautionary signs are emerging that could spell economic turmoil. Glenn pinpoints the contraction of bank lending growth and an alarming rise in delinquencies in consumer debt, particularly among younger demographics, as potential omens of a rocky road ahead.
Speaker 1:
Welcome to the Gordon Asset Management Podcast, a show for savers, investors and entrepreneurs, helping you to stay informed, invest wisely and achieve the unimaginable. Please stay tuned until the end of the podcast for important information and disclosures about our firm. Now please welcome Glenn Moore, partner and chair of the Investment Committee for Gordon Asset Management, for a brief market update.
Speaker 2:
Hi everybody, this is Glenn Moore. Thanks for tuning in to today's market brief. As of November 17, 2023, the S&P 500 index is up over 18%. By comparison, small cap stocks as represented by the Russell 2000 index are only up around 3.46% for the year and bonds, represented by the Bloomberg US Aggregate Bond Index, are only slightly positive for the year, up 0.54% year to date. Needless to say, 2023 has been another challenging year in the markets. In fact, this year, just seven stocks are driving more than 90% of the total return in the S&P 500 and NASDAQ, while the other 493 stocks are collectively down 2% on the year.
Speaker 2:
With regard to portfolios, our positioning throughout the year has been defensive, as we have seen concerning economic data that consumer spending, the primary driver of the US economy, could be weakening. We find support for our perspective in, among other things, the contraction of bank lending growth, which has indicated a tightening credit market. History has shown that this is often a precursor to broader economic challenges. Furthermore, there has been a notable increase in delinquencies in consumer debt, particularly in auto loans and credit cards, primarily among younger demographics. This surge in delinquencies raises concerns about consumer financial stress in an environment of rising interest rates, Reflecting on the lost decade of 2000 to 2010,.
Speaker 2:
We are reminded of the cyclical nature of markets and the criticality of adopting strategic positions during volatile periods. Decline can be the most difficult part of managing the business cycle, as the market has a knack for lulling investors into complacency. The prelude to the 2008-2009 downturn showcased such challenges, with notable market surges followed by steep declines. Our current strategy is deliberately structured to protect against these fluctuations. We're prioritizing allocations in short-term cash equivalent assets with robust yields of approximately 5% and investing in liquid alternatives that are designed to maintain a minimal correlation with the stock market's movements. I hope that you found today's update valuable. Should you have any questions or if you'd like us to review your portfolio, please do not hesitate to reach out to us through our website, WealthQBcom. Thanks for tuning in.
Speaker 1:
Gordon Asset Management LLC is a registered investment advisor. For more information about our firm, please visit WealthQBcom. The information in this podcast is presented for educational and entertainment purposes only and is subject to change without notice. Opinions expressed are those of the podcast's guests and don't necessarily reflect those of Gordon Asset Management LLC, its producers, hosts or guests. Information presented should not be construed as tax, legal or investment advice or a recommendation or solicitation for the sale of any product or strategy. Investors are encouraged to seek advice from qualified professionals to determine whether any information presented may be suitable for their specific situation. Investments involve risks. Neither Gordon Asset Management LLC nor its podcast participants shall be liable for losses resulting from decisions based on information or viewpoints presented on this podcast.