Stocks gave back some of the gains made in August as economic and trade fears kept bubbling up. In this environment the bond market remained red hot as interest rates plunged yet again. This boosted our portfolios relative to benchmarks as we have been taking more interest rate risk (but less stock risk) than most other portfolios for quite a few years now.

The stock market continues to rebound from all the traumatic events of the past year or so. Strangely, this is not due to particularly strong expectations for growth globally; it appears to be mostly related to interest rates declining in anticipation of an economic slowdown. 

The stock market has recovered all of the losses since the previous peak in late September 2018. This quick reversal was largely because interest rates are now lower than last year, and the Federal Reserve will not spark the next recession by raising rates, as inflation is mild at best.

With foreign markets, value stocks, and lower credit risk bonds weak in February and our relatively low allocation to the hotter areas of the market (like tech and small cap), our model portfolios lagged the U.S. market.