No one knows exactly what’s to come in the stock market, so we make the best choices we can with what we do know. We know what seasonal market trends look like based on historical data. Those trends suggest markets often peak in July and then taper to a seasonal low in October, before rallying toward year-end gains. Based on this data, as markets have been touching all-time highs, the Mainsail Equity Model has trimmed some overweight positions and taken some gains, pushing the cash position closer to 10%. The other 90% remains in our carefully selected long-term holdings.
The cash position has done well, navigating through the opportunities that presented themselves in the volatile first half of the year. With cash on the sidelines now, we will look for opportunities to become attractive again around October. If they do, we will put that cash back to good use, hoping to further supplement the model’s performance through the end of the year.
Northshore Wealth Management’s Mainsail Equity Model is our flagship allocation model, comprised of hand-selected blue-chip growth stocks in companies that maintain stability in their balance sheets, as well as a competitive advantage in their market sector. By retaining the flexibility to deploy cash at opportune times during market cycles, we can adjust our sail as winds change. The Mainsail Model is a tool used for focused growth, or it can be used in combination with other strategies to supplement a portfolio’s overall performance.
As I write this, the House of Representatives is preparing to vote on a bill that includes extending corporate tax cuts that would otherwise expire this December. Regardless of political opinion, data shows that maintaining low corporate tax rates supports corporate earnings growth, higher wages, strong employment rates, and a strong economy. So, markets are expected to react positively to this tax bill, which is expected to pass.
At the beginning of the year, many market analysts were placing a year-end target for the S&P 500 at around 6600 points. That’s a 6.5% gain from where it sits today at around 6200 points. There is no crystal ball, but I still agree this is a realistic year-end target. What’s always a realistic expectation is that, no matter where the market ends up in 6 months, it will have taken a bumpy road to get there. The Mainsail Model was built to capitalize on those inevitable bumps and potholes.
This is not a recommendation to buy or sell anything. This is an update for investors in the Mainsail Equity Model. What I can safely recommend is that you and your family should enjoy a wonderful and safe 4th of July.
Live long and live well,
Alyse
Northshore Wealth Management 