Fourth Quarter Thoughts: "Clutch"

October 19, 2023

Being a sports fan, when I hear the word "clutch", I think of players like Peyton Manning, Michael Jordan, Derek Jeter, and so many more players that when it came to critical situations of the game, these players could be counted on.  Although many times the superstars are the "clutch" performers, there are sometimes when you have to look at the bench for one.  When it comes to investing, you just might have to go to the "bench" to look for a "clutch" performer - especially when looking at the past couple of years.

Despite the minor comeback this year in the S&P 500, the index still sits over 10% down from the beginning of 2022.  If you have read my previous blogs, I talk about annual corrections in the S&P 500.  In 2023, we have yet to have one.  As October 19th, the index sits around 6.6% down from it's high on July 31st.1  See the chart below from J.P. Morgan Asset Management's Guide to the Markets2:

The rise in interest rates have continued to impact the returns on bonds.  This conservative area of most investment portfolios has not provided much in the form of "safety" for investors to put their money in.  

However, there has been sort of a paradigm shift the past couple of years when it comes to investing.  As interest rates rose, so did rate offers on bank CD's and Fixed Annuities, as well as yield on investments that hold Short Term U.S. Treasuries.  Depending on how you invest in the latter investments, they can potentially be more liquid than the former.   However, there is a good chance you can find those investments yielding 5% or more for one year.  This is quite a different story from the last 20 years or so where some of these investments did not yield 1%!  The chart here shows an interesting story of the inverted yield curve3:


The aforementioned superstars were not immortal. Their playing careers all eventually came to a halt.  Coaches and managers had to look to their bench, or bring in different players.  Depending on your timeline and risk tolerance for investing, we just might have to do that here in the fourth quarter of 2023; bring in different investments as we look for "clutch" performers for portfolios in this new age of investing.  

1., October 19, 2023

2. FactSet, Standard & Poor’s, J.P. Morgan Asset Management. Guide to the Markets – U.S. Data are as of September 30, 2023. 

3. FactSet, Federal Reserve, J.P. Morgan Asset Management. Guide to the Markets – U.S. Data are as of September 30, 2023.