The general stock market was up for the 1^st quarter.  Once again, only a handful of stocks continue to provide the majority of market gains.  An impressive run for the small group of technology stocks.  And most other parts of the market also inched upward and contributed some gains.

I enjoy the Symphony. I readily admit, however, that I do not love all performances.  Recently, we enjoyed Gershwin’s Rhapsody in Blue in full and I concluded THAT is Symphony that I love.  When all instruments and sections of the orchestra make a beautiful contribution and it comes together so brilliantly and in accord, it is something to behold.

The reason I mention this is that I make a somewhat “rough” parallel to the markets:  This market has not “felt” like a symphony.  Parts moving upward and other sectors just sitting or struggling and underperforming.  We will certainly take the end result. But diversified portfolios have not seen the full fruition of returns due to some sectors not performing as well.  Healthcare industry has been hit or miss.  Banks are performing decently, but still recovering from the scare about this time a year ago.  And as a general statement, it’s the riskier stocks that have risen more so than the solid and fundamentally sound dividend-paying stocks. Portfolios are up, but have not quite enjoyed the “feel” of all parts going up in unison. 

What’s good:

We have an economy that is holding up well, inflation seeming to be under control, continued estimation that the Fed will begin cutting rates this year, and valuations not unhealthy since much of the market is not substantially up.  (that small group of tech stocks notwithstanding) The job market remains sound and the consumer somehow continues to spend.

What’s of concern:

Well, inflation could possibly not be tamed yet.  Interest rates could go higher before they ultimately come back down, geopolitical risks remain significant, and an economy that could have been stubbornly strong for a while could now be weakening.  Then there’s Bullish sentiment near a high.  Bullish sentiment (a measure of collective confidence/overconfidence in the markets) actually has a history of being a sound contra-indicator.  When everyone feels rosy and good, that tends to not bode well. Plus there are signs of consumer debt being stretched – as measured in delinquencies in credit cards, car loans, etc.  As well, corporate real estate remains in uncertain times –  a topic too involved to discuss much here, but very relevant to the big picture.

There are many important parts, but in my humble view right now, employment and energy prices (recently creeping upward) are important keys this Spring and Summer.

For more “expert views”, I have available the Raymond James Quarterly Investment Strategy and Outlook.  Let me know if I may forward a copy to you. 

Although Springtime teased us a few times in Feb-March and then receded, we are finally seeing it come around.  I was in Texas a couple of weeks ago to visit my daughter and I much enjoyed the Texas Februarys and Marches that I always remembered — 70 degrees and mostly sunny.

Wishing you well.  AI did not write this letter, rest assured.

Key