Equity Investing
We seek to buy growing, profitable, and well-capitalized businesses at reasonable prices. The habit of relating quality to value is central to the WCA equity investing process.
Asset Allocation
A comprehensive suite of asset allocation portfolios focused on matching investment objectives with risk tolerance. Both passive and active strategies are offered.
Fixed Income
This portfolio seeks to generate a stream of income from a portfolio of 30 investment-grade corporate bonds. The portfolio is constructed as a “ladder” with maturities spanning 10 years.
Recent Commentary
A Warning Over Speculative Debt
Last week, the European Central Bank (ECB) raised a red flag, saying some member banks have ignored warnings of risks associated with leveraged finance, according to Bloomberg News. The ECB hit a handful of European banks with capital charges in an attempt to encourage the banks to exercise greater caution. These actions come amid growing concern in Europe over a looming energy crisis, ongoing war in Ukraine, and struggles at some financial institutions. These pressures are evident in both confidence indicators like business confidence (graph A, below) and measures of financial stress (graph B, below). Graph A Graph B Rise…
What Will Drive Return?
Earnings drive stock prices over time. This simple truth is evident in the past century’s market performance. Over the past 100 years, both the S&P Composite index and S&P Composite index earnings gained about 6-7% per year. The profits, along with the market’s appraisal of the value of those earnings, rose and fell year-to-year. Sometimes, those swings in earnings and valuations were large, creating excitement and anxiety. What drove the earnings growth? Fortunately, we see an excellent and rational cause for the growth in earnings. As the chart below shows, we can trace growth in stock prices to economic growth…
Q4 2022 Tactical Asset Allocation
Central Bank all in to fight inflation Markets signal inflation to fade Rates to push higher still Policymaker credibility key to fight Valuations more attractive. We remain cautious based on incoming data and enter the final quarter underweight risk assets.However, policy priorities seem to be having some positive effect on expected inflation, despiteupsetting financial markets. This is a difficult and complex environment, and we continue to followour tactical discipline in navigating a very unusual year. While we are not out of the woods yet,valuations are becoming better as are longer-run expectations for returns.