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At Eaton Financial Group, we understand that every person’s journey is different. Our first priority for every new client is to listen and learn about your personal path and the goals you have in mind for the future. 

We are here to provide you with professional support to help make your goal a reality. Bookmark this page and check back often for updated financial tools and points of interest in support of guiding your financial journey.

CIO Notes

CIO Notes by Month

August 2021
In July the broad market (S&P 500) was up 2.5% and the Dow gained 1.3%, while the small-cap index (Russell 2000) lost -2.9%. Value dropped, and large-cap US growth regained the lead. Given the constant and extreme reversals of leadership trends, this year is proving quite difficult to handicap what will “work,” but validating the merit in diversifying asset classes.
Also this month, the five largest tech companies—Apple, Microsoft, Amazon, Alphabet (Google), and Facebook—reported excellent earnings results, and as a group their revenue increased over 30%, once again asserting their prominence, as they now comprise close to 23% of the SP500.
For now, and resistant to further shutdowns, the USA remains open and the stock market does not exhibit concern with the recent spike in Covid, resulting from the Delta variant.
The Federal Reserve seems reassured that the recent inflation surge is temporary (and we agree), and they have maintained their focus on full-employment, while keeping inflation moderately above target at 2%. By way of reminder, the Fed’s prime directives: to promote steady prices (i.e. inflation) and full employment, to promote stability in the financial system. Inflation concerns have abated during the last month, after a sharp increase during the last 9 months.
As always, we advise focusing on what we may control, keeping aware of investment opportunities commensurate with sound risk management principles, where we will focus on avoiding a loser, and winners will take care of themselves. Since we can’t predict future markets, we focus on the ongoing and consistent implementation of your long-term plan. We have made no updates to the portfolios since our last update 
(July 1, 2021).
Be well and invest wisely.
July 2021

The markets still seem to be driven by the vicissitudes of both the “reopening” trade as well as Fed policy (via massive and ongoing stimulus).

It’s halftime in 2021! In one of the best first halves since 1998, US stocks have enjoyed extraordinary gains since the Covid-19 bear market, yet there is no clear leadership trend (such as technology, innovation or “reopening” from April through December 2020). Furthermore, other areas that thrived during the pandemic (such as clean energy) became overbought, then reverted to their mean, and are now regaining strength.
Driven by optimism related to both reopening of the economy and massive government stimulus, market leadership shifted from growth to value stocks last fall, including financials, energy, materials, and industrials. Performance of these sectors was largely driven by rising prices, after a prolonged period of underperformance.
There is still a tug of war between growth and value, where in June 2021, growth rallied back up and value, which led the way for several months, dropped. We have in fact increased our positions in BOTH for this quarter model update (made 7/1/21), by adding Dodge and Cox Stock find (DODGX) and i-shares Core SP 500 (IVV). We have also added some exposure to larger China growth stocks (GSAIX), with concentration exposure to technology and other innovation-oriented companies.
Data shows US consumer confidence reaching highs, given the stronger economy and job market. Home prices jumped the most in more than 30 years in April 2021. Earnings season gets under way soon, and aside from some of the reopening trades (travel, leisure, etc.) sinking over concerns about further spread of the Delta variant, we have conviction in the upward trajectory of equity earnings and remain positioned as such. As markets evolve, we will advise and adjust where needed.
As We Will Consistently Counsel Our Clients:
1. The plan drives the portfolio – not the other way around.
2. Unless your plan changes, do NOT change your portfolio.
3. We do not know or care where the markets will move, as we cannot control them.
We design our various portfolio models around quality investments, and in engineering the portfolios so we know HOW they will respond WHERE the overall market moves. This way we may assist you in choosing the portfolio best suited to your individual volatility preferences and liquidity needs.
Be Well and Invest Wisely,
June 2021

There was little reason to sell and go away this May.

While in fits and starts, the rotation into value from growth is persistent and we have adapted the portfolios to reflect this.

For the month of May, the DJIA gained 2.2%, the S&P 500 was up 0.7%, and the small cap Russell 2000 gained 0.3%. The NASDAQ 100 lost -1.2%. Foreign markets outpaced those in the US. The MSCI EAFE Index gained 3.5%, and Europe, as measured by the iShares Europe ETF (IEV), was up 4.3%. Emerging markets were up 1.7%.

As we know, the coronavirus slammed the brakes on the economy in March 2020 and suddenly economically sensitive stocks—especially travel—looked awful, and powerful growth stocks looked brilliant.

With the ramp-up in vaccines and the economic relief effort in the fall, we invested in many of those hard-hit sectors.

Previously lagging areas—small caps, value, and energy—started to come back when stocks were weak, and value lost modestly less. Then by November, investors became more optimistic about the economy, and a market shift was underway.

The market rallied, and value beat growth every month, but really took off in March 2021. Value funds of all capitalizations continue to be leaders and we are in fact replacing some of aggressive growth positions, which led us out of the Pandemic.

Stocks have been on an extraordinary run since the Covid-19 bear market, and they’ve had an unusually strong start to 2021.

The S&P 500’s 12% year-to-date gain in 2021 is already quadruple the median 3.1% gain at this time of year.

We believe in the rally and have positioned the portfolios as such.

Missive of the Month

August 2021

“For a piece of information to be desirable, it has to satisfy two criteria: it has to be important, and it has to be knowable.” -Warren Buffett

Much has been made of economy, where the markets are headed, etc. To Mr. Buffett’s point, we know that the future is unknowable, and we feel this is an excuse to once again point out that we choose not to make bets on economic predictions. That’s especially true now when the biggest wildcard is inflation – a phenomenon no one fully understands. But just because something is unknowable doesn’t mean it’s unimportant. That is why we will devote this memo to a topic we strongly disavow, predictions/forecasting.

Many financial advisors believe their job involves developing a macro-economic outlook and/or predicting the markets’ direction. We reject that. It is not that we will ignore forecasts or consensus. We will certainly study them, but we will not pretend to be able to have any skill in foretelling movements with any level of confidence, and as we have consistently pointed out, our focus rests squarely on factors within our control, such as asset allocation, acting in your best interests, and with a focus on your overall long-term financial plan.
Our Role at Eaton Financial Group is to advise on the successful implementation of a well thought-out financial plan. We help our customers MINIMIZE the regret of doing the wrong thing at the wrong time. With that, we are sharing the Eaton Financial Group Client Engagement Tenets.

We Believe In The Following:

  • Our purpose is to provide great advice.
We do so by providing the unvarnished truth and by assisting in controlling only those factors within your control
  • Your active participation is essential in our on-going financial planning process. Our client partnerships allow for consultation together before considering any material financial decisions.
  • Your plan guides the portfolio and your financial decisions, not the markets nor headlines in the news. If the plan hasn’t changed, don’t change your portfolio.
  • The most successful financial plan provides peace of mind, achieves your objectives, and minimizes the risk of outliving your money.

Important Investing Truths To Keep In Mind:

  • No strategy works 100% of the time. There will be times when your plan does not seem to be working. Process always trumps returns in uncertain scenarios.
  • Investing is about tradeoffs. Investing with emotion will provide short-term relief, but at a long-term cost. True performance can only be judged correctly over an entire market cycle.
  • Beware of the media’s influence. Their primary goal is to get you to tune in, not make wise financial decisions. They are masters of sensationalization and eliciting our emotions.
  • Real investor skill is demonstrated through discipline and patience. Our emotions and mental hardwiring influence us to react hastily to news and market movements. While it will feel good at the time, it often results in costly mistakes.

Please write to us or call with any comments/questions on how our client engagement tenets may apply to your specific situation. If you are not a client, please contact us for a cup of coffee and a second opinion – our door is always open.

June 2021

Crypto: The Good, the Bad and the Ugly

If there was an apt summation of the get rich quick mentality and how crypto seems to bring out the worst and best in us as investors, Tuco (from Clint Eastwood’s 1967 Spaghetti Western) nailed it. He wanted the easy way out, but also reminds us that working SMART, rather than hard is also a decent way to go!

In this month’s article, I wanted to relay what I have been learning about crypto currency during the last couple of years, what I have found to be the Good and the Ugly, and what I have concluded.

Click to read the full story

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