The Sharp Financial Group Reviews the Economic Moment: Q3 2019

For most, running a business is an all-consuming endeavor. And in the face of everyday demands, staying current with the latest economic and market trends can be difficult. That's why The Sharp Financial Group hosts recurrent webinars that provide unique insight that can enrich your thinking and influence strategic choices and planning in your business.

While the quarterly webinars are focused mainly on the investment management and financial planning side, it's the overall philosophy that drives the team at Sharp each and every day. At the core, Sharp's holistic, integrated financial management approach takes into account multiple factors including accounting and tax planning, business advisory services, capital solutions, family office and, of course, wealth management. In the end, it's all about providing clients with the best service possible.

In this recent webinar, Sharp’s Chief Investment Officer, Alain Van Loo, provided clients with data-backed analysis on the current global economy and markets. In previous webinars, some of the topics of discussion also focused on the shape of the U.S. Treasury yield curve, an analysis on the state of the domestic housing market and an examination on the recent strength of the U.S. dollar.

Here is a summary of the topics addressed during the latest webinar.

A Recap of the U.S. Economy and Global Markets

While Q3 of 2019 produced a lack luster U.S. GDP of 1.7%, Alain maintained his full year estimate of 2.4%. This is in contrast to 2018 when the U.S. economy produced a 3.1% GDP which reflected the strongest economic production since the great financial crisis.

Looking from a more top line perspective, Alain noted that the S&P 500 index gained over 1% in the quarter, while the NASDAQ was relatively unchanged along with both the UK and German stock indices. There was a significant outlier with the Hang Seng (Hong Kong) losing nearly 10% on the quarter.

While overall benign quarterly numbers may reflect a general sense of calm, it can be argued that if you really dive further into the details, one might conclude a different perspective.

Alain noted: “It is important to gauge where we are in the global economic cycle, especially in light of the volatility we have been experiencing of late.”

Overall, market volatility is certainly something to be cognizant about, especially given that geopolitical headwinds seem to be with us for the foreseeable future (impeachment proceedings, China trade dispute, Brexit, U.S. election, etc.).

A Look at Alternative Investments, Namely Private Equity

Continuing, with the volatility in the stock market, some investors have looked to alternative investments (annuities, hedge funds, private equity, etc.) as a blanket solution to protect against investment gyrations.  These types of investments can offer the potential to enhance the risk-reward characteristics of a traditionally diversified portfolio.

Private equity investing has historically allowed investors to:

• Own the cash flows of a business which provides consistency and stability in growth
• Provide the opportunity to invest earlier and develop value ahead of public investors
• Gain access to deals that have limited access in general

Alternatives, and more specifically the private equity landscape, have undergone significant changes and a form of democratization of investment opportunities access.  

Key Takeaways for Business Owners from The Sharp Financial Group:

• Diversification remains a core component of The Sharp Financial Group’s investment philosophy
• Utilizing alternative investments may provide an excellent avenue for investors to attain diversification
• General market volatility seemingly is here to stay for the foreseeable future and, as a result, close oversight of investments remains very important
• Global economic production is continuing to slow and may potentially add to the recent period of volatility

Disclosures

Sharp Financial Services, LLC d/b/a The Sharp Financial Group (“Sharp Financial”) is a registered investment advisor. Advisory services are only offered to clients or prospective clients where Sharp Financial and its representatives are properly licensed or exempt from licensure.

The information provided is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor's particular investment objectives, strategies, tax status or investment horizon. You should consult your attorney or tax advisor.

All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability or completeness of, nor liability for, decisions based on such information and it should not be relied on as such.