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APA Nicholas 3x4HI RGBAllegiant Private Advisors has named Portfolio Manager Luke Nicholas, CFA, CFP®, a Principal. 

Luke, who started with the firm in 2013 and previously served as research analyst, will continue to serve Allegiant client families in his current role as Portfolio Manager. 

Our unique team approach to customized wealth management is rooted in hiring and retaining the very best talent. With our steadfast commitment to personalized, fiduciary-level guidance and concierge-level service as the firm continues to grow, we’re fortunate to have Luke join the ranks of Principal at Allegiant. 

Click here to learn more about Luke’s professional experience

Am I taking the best approach in my business? Am I making the right investment decisions? What am I not thinking about that I should be thinking about?

These are some of the common questions that individuals and business owners often ask themselves. However, many of the most successful people in life have someone who they lean on as a “thinking partner” to talk through difficult situations, from pivotal business decisions to the run-of-the-mill things that life throws at us. What most people don’t realize is the value of that relationship and how it can have an exponential impact on how their lives turn out. 

Chart Diverging Valuations 12 2018

If the chart above looks familiar that is because it was also the Chart of the Week on September 21, 2018. It displays the relative valuation (P/E) of U.S. stocks (Russell 3000) versus stocks of the rest of the world (MSCI ex U.S.). In September, we pointed out the valuation divergence had widened out to a 40% U.S. premium. Fast forward three months and the premium is now only 27%, a substantial move given the short amount of time. The reduction in premium is of importance and the path of convergence is worth understanding. There are several ways for the two valuations to converge. The best scenario would be international markets outperforming, driving valuations higher until they catch up to U.S. valuations. The least desired path is international valuations falling lower due to declining international markets, while U.S. markets decline at a faster pace, causing U.S. valuations to converge with international markets. The current convergence path is the least desired. International markets have fallen about 14% since September 21, while U.S. markets have declined almost 19%. Even with this recent move, there is more room for convergence. This trend is worth paying attention to as we move into 2019.

Chart Diverging from Typical Stock Bond Return Relationship
As we near the end of 2018, it has proven to be a historically challenging year for balanced portfolios as both stocks and bonds have struggled. The chart above shows the annual return of the S&P 500 and 10-year treasury bonds since 1928. Over this time period, stocks and treasuries have both posted negative returns for a calendar year only three times. If the year ended today, 2018 would be the fourth such year. This occurrence is so rare because stocks and bonds historically have a very low correlation. When stocks sell off, it is not uncommon to see investors shift investment dollars from stocks to bonds in the hopes of safer, less volatile returns, which then drives bond prices higher. However, that has not been the case so far this year. Part of what has held off the move to bonds has been the raising of short-term interest rates by the Federal Reserve, which makes existing issues less attractive. Also, because of the recent increase to the federal deficit there has been a heavy surge in treasury issuance which has kept pressure on treasury prices. As we move forward into 2019, we will be paying attention to see if the return relationship between stocks and bonds returns to its typical behavior. 

Chart Gas Prices
A byproduct of the recent drop in crude oil prices has been a 17% decline in average unleaded gas prices over the past month. Over the same time frame, crude oil prices have fallen even more dramatically. The down move in gas prices should provide a boost to discretionary income of consumers, who often times could use some extra spending money around the holidays. The fall in oil and gas prices looks to be a function of supply and production levels and mirrors typical volatility in the energy commodity sector. Consumers should notice the savings at the pump at a time of year where it is much needed. 

APA Jones 3x4HI RGBAllegiant Private Advisors, an independent firm offering fiduciary-level financial planning and investment advisory services, has announced the promotion of Benjamin W. Jones, CFP®, AIF®to the role of President. Jones, who currently serves as Allegiant’s Chief Investment Officer, will formally transition into the leadership position by the year-end. Allegiant Private Advisors Co-Founder Martin Kossoff, CFP®, AIF®, who has served as President since the firm was established in 1997, will assume the role of Chairman. 

“Our commitment, rooted in a unique team approach to customized wealth management, remains resolute,” said Jones. “Under Marty’s leadership, Allegiant was created as a company with staying power, permanence and lasting value, employing a talented team who believes in the vision to create, enhance, and maintain the most trusted independent financial advisory firm in the region.  I look forward to leading the firm as we continue to serve, advise and guide our clients and their families for generations to come.” 

Chart Getting Closer to Neutral
Since the Federal Reserve began raising short-term interest rates in 2015, there has been substantial debate about how far they would go during this tightening cycle. The expectation has been that they would try to raise the fed-funds rate to be at least in-line with their projection of the neutral rate, or the rate that is neither speeding up or slowing down the economy. As you can see in the chart above, the fed-funds rate is approaching that level. Which is why when Fed Chairman Powell stated in an interview in early October that the fed-funds rate was “a long way from neutral,” markets reacted very negatively. His statement implied that there were many more interest rate hikes on the horizon, which would almost certainly act as a headwind for economic growth. However, just last week, Chairman Powell backtracked on his previous statement, stating that interest rates were “just below” the level that would be neutral for the economy. This led to a sharp drop in expectations for further rate increases. These mixed signals from the Fed are one of the reasons that volatility in financial markets has been so elevated recently. We will find out more at the Federal Reserve’s next meeting later this month, but for now it seems like the Fed has made a slight pivot away from significantly higher interest rates. 

Chart Recent Drop in Oil Prices


The price of oil has dropped sharply over the last few months, slumping 30% since its peak in early October 2018. A few factors are behind the move. The first is a continued surge in production from U.S. shale producers. Domestic oil production is up over 20% from a year ago. With OPEC pressing forward without supply cuts, the combination of booming U.S. oil production and stable OPEC production has led to a swelling of global oil supply. At the same time that oil supply has risen, concerns about global oil demand have started to surface. Just last week OPEC came out and cut their forecast for 2019 global oil demand for a fourth straight month. This confluence of factors has led the market to quickly and dramatically reevaluate supply/demand expectations as we move into 2019. While a further decrease in oil demand could mean that a slowdown in global growth on the horizon, thus far, the pullback in oil prices seems to be normal, albeit volatile, market behavior. 

With stock markets tumbling in October it is a great time to step back, evaluate the economy, and determine if this market correction is the start of the next big stock bear market. More likely than not this is the same run-of-the-mill correction we’ve seen four times in the last three years. But, as we move further along in this economic expansion, every decline deserves close attention. Needing no additional emphasis, it’s also never fun to see account values decline, even if only on a temporary basis.