Guyasuta Investment Advisors

Pi Day and Spring Forward Sunday is a big day! March 14 has become known as Pi Day (3.14). This year you get to eat your pie a little earlier as we remember to move the clocks forward an hour. The month of March in Pittsburgh has also had the reputation: In like a Lion, Out like a Lamb. The weather is getting better, and the flowers are starting to break though the ground. Spring is definitely around the corner. #Guyasuta #PiDay #SpringForward

First Market Correction of 2021 This week the market had the first correction in 2021. When the market falls more than 5%, investors call the down movement a correction. The reason that markets drop always have a reason and this one is no different. There is a fear that inflation might be coming back to the economy earlier than initially forecast along with the accompanying rise in interest rates. The 10-year Treasury has gained 63 basis points since the start of the year. These moves up and down in the market, however, are typical of a normal market.

We were a little concerned that the biggest news for the month of February was that Phil saw his shadow and we were going to have 6 more weeks of winter. At the end of the month, there was a different message as the House of Representatives approved the $1.9 Trillion Covid-19 Relief Plan. If this Plan gets approved in the Senate, the government will have pumped $5.2 trillion into the economy in the last 12 months. The markets were not sure what to make of the huge infusion of... money and the corresponding 51 basis point jump in interest rates since the beginning of the year. The S&P 500 was up 2.8% for the month. There was some additional good news at the end of the month, after the markets had closed, Johnson & Johnson had received FDA approval for a one shot Covid-19 vaccination. We believe that as more people get vaccinated, the additional government stimulus and the continuing dovish monetary policies there will be a strong economic recovery in 2021.

Pitchers and Catchers Report Growing up the news that pitchers and catchers reporting meant that baseball season was underway and Spring training was about to start. After weeks of cold weather and gray skies, that comment reminds us that seasons would naturally change. One of the best ways to prepare for a new season is to review your existing situation. As with everything, it is always important to review your current financial situation as markets also change.

Year of the Ox One of the aspects of the Chinese New Year is the changing of the lunisolar calendar. The Ox represents a strong perseverant force that plows quietly and steadily forward. Investing in the equity market sometimes has to take the same approach. It is important not to be distracted from the noise and stay the course. We wish you prosperity in the Year of the Ox!

Happy New Year from Guyasuta Investment Advisors! Chief Guyasuta and George Washington discussing 2021 with no Covid! #Guyasuta #HappyNewYear

Guyasuta Investment Advisors wishes you a Merry Christmas!!!Guyasuta Investment Advisors wishes you a Merry Christmas!!!

Tis the Season Giving As we get to year end and look forward to putting 2020 behind us, do not forget about gifting. There are many charities that are struggling to meet the increased demands that have been exasperated by the pandemic. There are two recommended ways for investors to give to the charities of your choice. Even though the government has ruled that those that need to take a Required Minimum Distribution are able to defer that distribution through the Cares Act, giving directly through an IRA is still a tax-free gift. The second way would be for investors to donate low basis stock. This gives the charity the full value of the gift without the investor having to pay the stepped-up value. #Guyasuta #Gifting

From everyone at Guyasuta Investment Advisors, we hope you have a Healthy and Happy Thanksgiving!From everyone at Guyasuta Investment Advisors, we hope you have a Healthy and Happy Thanksgiving!

Government Stop-gap Funding Sometimes there are advantages to being able to delay making a decision. Congress, as has been its tradition, has waited to approve a relief plan until the last possible minute. The Covid-19 pandemic and the accompanying shutdowns were supposed to cause massive holes in state and municipal governments. Fortunately, a strong stock market, continued retail sales (on-line) and lower interest expenses has helped states get a better handle on their budget issues. We expect that a smaller relief plan will be approved with a larger plan to be worked on in January under the new administration. #Guyasuta #StopgapFunding

Time to Refinance The Federal Reserve has reported that the net worth of U.S. households in the third quarter of 2020 has risen 3.2% to a new record of $123.52 trillion. Clearly, the Covid pandemic has caused more people to stay home and not indulge on family entertainment including shows, sporting events and vacations. Many of these households have been able to spend money improving their homes which has also enabled their houses to become more valuable. With record low interest rates, it is definitely time to review whether it makes since to refinance your home. #Refinance #Guyasuta

This month’s stock price performance is on track to be the 5th best November on record for the S&P 500 index. Smaller-cap stocks have also participated with the Russell 2000 index headed for their best month in two decades. Promising trial data from Covid-19 vaccines has been a primary factor behind the market’s optimism. While the vaccine data is indeed highly positive, investors should be careful not to conclude that economic and market risk has disappeared. A sign of investor complacency is the reduction in short interest to levels not seen in more than fifteen years. As a result, we believe it is important to review your current asset mix and rebalance accordingly to your targeted asset allocation.

Despite the modest uptick in longer-term Treasury yields rates in recent weeks, corporate America continues to take advantage of historically low interest rates and tight credit spreads to fortify balance sheets and provide acquisition funding. Highlights this week include Verizon’s five-part, $12 billion refinancing transaction and Bristol-Meyers’ six-part, $7 billion deal to provide financing for the acquisition of MyoKardia. Month-to-date, there have been just shy of $44bn... of investment grade corporate bonds issued. Year-to-date, the investment grade market has absorbed nearly $1.7 trillion of issuance, a 59% increase over the same period last year. From an equity investor’s perspective, taking advantage of low rates and accommodative capital markets to lower interest costs and finance acquisitions is, on balance a positive. It does, however, make it challenging for bond investors with an eye on absolute yields to find attractive opportunities to deploy capital. See more

October has been another volatile month for equities. Selected large capitalization technology stocks, despite generating solid earnings results, helped lead the S&P 500 to a 2.7% loss for the month. The lack of a Federal stimulus deal, accelerating Covid 19 infections and Presidential election jitters all contributed to investor uncertainty. The rising number of Covid infections globally is raising concerns with respect to the overall strength and durability of the economic recovery. With this backdrop, investors should maintain adequate cash reserves in their portfolios in order to take advantage of potential market volatility. When stocks go on sale, investors should look to add high quality companies that generate sustainable free cash flow, maintain low levels of debt on their balance sheets and have strong management teams.

Legendary investor, Oaktree Capital’s Howard Marks, writes periodic investor memos that Warren Buffett considers obligatory reading. In this most recent memo from mid-October, Marks offers a sober top-down assessment of the current economic and investment environments. He concludes: [W]hen uncertainty is high, asset prices should be low, creating high prospective returns that are compensatory. But because the Fed has set rates so low, returns are just the opposite. Thus, the odds aren’t on the investor’s side, and the market is vulnerable to negative surprises. This is how I described the prior years, and I’m back to saying it again. Please follow this link to read the full memo: https://www.oaktreecapital.com//memos/coming-into-focus.pdf