Discipline Works Both Ways
The same rules that told us to trim in September are telling us to add today.
In September, we described ourselves as "bashful bulls": still optimistic, but trimming the edges after a strong run. Since then, markets have delivered some of the turbulence we were preparing for. Interest rates moved higher, credit spreads widened, and stocks pulled back. That's uncomfortable. It's also exactly why we rebalance.
In this Trade Memo, Kelly Olczak, CFP®, Managing Partner at LynnLeigh & Company, explains why discipline works both ways. When markets run hot, it means trimming what has grown too large. When prices improve, it means being willing to add, carefully and without assuming the volatility is over.
The memo covers four moves: modestly increasing our tilt toward stocks, sharpening our international exposure, broadening our positions in artificial intelligence and defense, and putting today's higher bond yields to work.
It also looks at why the economy has held up better than the market mood suggests, and it includes two charts. One shows why a rough stretch inside a year is normal, even in years that end well. The other shows why higher starting bond yields matter for what bonds can earn from here.
As the year winds down, the memo closes with the planning questions worth revisiting now, from year-end tax opportunities to beneficiary reviews.
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