Dear Spartan Client,

 

“I would maintain that thanks are the highest form of thought; and that gratitude is happiness doubled by wonder.”

— G.K. Chesterton

 

“What’s there to be grateful for?” Given the steady supply of negativity experienced over the last few years, this is a rational and too-often-asked question. To many people, gratitude does not come naturally.

However, just like successful investing, having a process for practicing gratitude makes all the difference. Research shows that having such a process consistently produces benefits, from enhanced immune systems to improved sleep.

In this Monthly Note, we take part in the practice of gratitude. We are grateful for the inherent features and benefits that come from our rules-based process. But most of all, we are grateful for you, our clients, for your trust, kindness, and commitment to trusting our stewardship of your finances.

Below are the asset classes utilized in our portfolios and their model-driven exposure heading into December. 

Square indicates no change month-over-month. Arrows indicate increase/decrease month-over-month. Adjustments can vary across Spartan Strategies depending on each Strategy’s objectives. What’s illustrated above most closely reflects allocation adjustments for the Spartan Growth Strategy. 

Disclaimer: this note is for general update purposes related to the general strategy and approach of Spartan Planning portfolios. Every client’s situation including Risk Profile, Time Horizon, Contributions, and Distributions is different from other clients. Your exposure to any given asset class will depend on your goals, risk profile, and how tactical or passive your risk profile calls for. If there have been changes to your risk profile and/or goals or if you wish to discuss them in more depth, please contact your advisor.

At a Glance: Allocation Adjustments Heading Into December, 2021

U.S. Equities: Exposure will increase due to handoffs from weaker international equities.

International Equities: Exposure will decrease. Emerging markets entered a long-term downtrend, joining the already-in-place downtrends over the intermediate-term. Foreign developed equities also entered an intermediate-term downtrend, while the long-term uptrend remains intact.

Real Estate: No change.

U.S. and International Treasuries: Exposure will increase slightly due to long-duration bonds re-entering an intermediate-term uptrend. All other segments of the yield curve, both domestically and internationally, remain weak across multiple timeframes.

Inflation-Protected Bonds: Exposure will not change and uptrends remain intact.  

Short-Term Fixed Income: Exposure will decrease slightly by returning some of the previous allocation to longer-duration bonds.

Alternatives: Exposure will not change due to continued downtrends in gold.

Three potential macro catalysts for the recent trend changes:

 

  • On One Hand: Workers in the U.S. resigned from a record 4.4 million jobs in September, according to the data released earlier this month. The wave of resignations hasn’t been uniform. States in the West, including Hawaii, Montana, Utah, and Oregon, saw the most significant growth in quits in September. Eighteen states broke or tied their records for quits levels in September. Quits in the education sector — which accounts for a larger share of employment in Northeastern states than many others — have risen at the fastest pace of any industry since January.
  • On the Other Hand: The economy is showing broad-based signs of acceleration heading into the end of the year, with consumers ramping up spending, businesses stepping up investment, and jobless claims falling to historic lows. Household spending rose 1.3% in October compared to a month earlier, while personal income increased 0.5% last month. Consumers are benefiting from a strong labor market. And they are spending at a faster pace than inflation, which recently hit a three-decade high.
  • Fed Still Concerned: Federal Reserve officials expressed greater concern at their meeting earlier this month about how long inflation would stay elevated. They also discussed whether they should prepare to raise interest rates in the first half of next year in an attempt to rein in inflation. The Fed closed a chapter on its aggressive pandemic policy response when it approved plans at the Nov. 2-3 meeting to shrink its $120-billion-a-month asset purchases by $15 billion each in November and December, a pace that would end the program by next June. However, they reiterated that this approach would be flexible and subject to change. Currently, the Federal Reserve wants to end the asset purchases before they lift interest rates, which remain near zero.

Reasons for Gratitude this Thanksgiving

Gratitude does not always come naturally, but like most things, it becomes more fruitful (and easier) the more repetitions you have. As it relates to our own firm, we hope you will oblige us as we mention a few things that stood out to us this year.

First, we are thankful for having a process for making allocation decisions that is impervious to the prevailing news cycle. Although we are 20 or so months into a global pandemic that has caused unprecedented levels of social and economic lockdown in the United States and upended one of the longest-running bull markets in history, the systematic rules we use continue to work by keeping us invested in the strongest segments of the market. There is tremendous peace and comfort in knowing that we don’t have to predict what is going to happen in the future because we have a process that will automatically respond to dynamic market environments.

All we must know is what is knowable – and then act as the trends prescribe. The Omicron variant news is an example. International markets have so far been the most negatively affected, but it was Trend – not our intuition or a “crystal ball” – that led us to underweight this asset class. Likewise, it is Trend that allowed us to have high allocations to real estate, which has been the leading performer in 2021. Finally, it is Trend that moved us into very low duration across our fixed-income allocations.

For our clients, the good news is not so much that Trend got it right yet again in 2021, but that we can all rely on it going forward since it is based on the one factor that always reflects market behavior: PRICE.

 

Last and most important, we are thankful for our clients. Our process and stewardship mean nothing without clients who believe in what we do. It is humbling and exciting.

 

We wish you the best during the upcoming holiday season!

 

David Childs, Ira Ross, and Eric Warren

Spartan Planning

Disclaimer: this note is for general update purposes related to the strategy and approach of Spartan Planning portfolios. Every client’s situation including Risk Profile, Time Horizon, Contributions, and Distributions is different from other clients. Your particular exposure to any given asset class will depend on your goals, risk profile, and how tactical or passive your risk profile calls for. If there have been changes to your risk profile and/or goals or if you wish to discuss them in more depth please contact your advisor. This email and the data herein is not a solicitation to invest in any investment product nor is it intended to provide investment advice. It is intended for information purposes only and should be used by investment professionals and investors who are knowledgeable of the risks involved. No representation is made that any investment will or is likely to achieve results comparable to those shown or will make any profit at all or will be able to avoid incurring substantial losses. While every effort has been made to provide data from sources considered to be reliable, no guarantee of accuracy is given. Historical data are presented for informational purposes only. Investment programs described herein contain significant risks. A secondary market may not exist or develop for some investments portrayed. Past performance is not indicative of future performance. Investment decisions should be made based on the investors specific financial needs and objectives, goals, time horizon, tax liability, risk tolerance and other relevant factors. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Investors should consider the underlying funds’ investment objectives, risks, charges and expenses carefully before investing. The Advisor’s ADV, which contains this and other important information, should be read carefully before investing. ETFs trade like stocks and may trade for less than their net asset value. Spartan Planning Group, LLC (“Spartan” or the “Advisor”) is registered as an investment adviser with the United States Securities and Exchange Commission (SEC). Registration does not constitute an endorsement of the firm by the SEC nor does it indicate that the Adviser has attained a particular level of skill or ability. Indexes are unmanaged and do not incur management fees, costs, and expenses. Spartan’s risk-management process includes an effort to monitor and manage risk, but should not be confused with and does not imply low risk or the ability to control risk. There are risks associated with any investment approach, and Spartan strategies have their own set of risks to be aware of. First, there are the risks associated with the long-term strategic holdings for each of the strategies. The more aggressive the Spartan strategy selected, the more likely the strategy will contain larger weights in riskier asset classes, such as equities. Second, there are distinct risks associated with Spartan Strategies’ shorter-term tactical allocations, which can result in more concentration towards a certain asset class or classes. This introduces the risk that Spartan could be on the wrong side of a tactical overweight, thus resulting in a drag on overall performance or loss of principal. International investments may involve additional risks, which could include differences in financial accounting standards, currency fluctuations, political instability, foreign taxes and regulations, and the potential for illiquid markets. Investing in emerging markets may accentuate these risks. Diversification strategies do not ensure a profit and do not protect against losses in declining markets