Politics and Your Portfolio

Politics and Your Portfolio

Please note: This update was prepared on Thursday, November 10, 2022, prior to the market’s close.

A bitcoin bloodbath and yet-to-be-determined majorities on Capitol Hill stalled a three-day rally on Wall Street this week. But a positive (lower) inflation reading on Thursday put some wind back in the markets’ sails—the S&P 500 closed up over 5.5% and the NASDAQ Composite rallied more than 7%.

Despite a headline inflation reading of 7.7% year-over-year in October, the decline from the 8.2% annual rate last month was a bullish sign. The report opens the door for Federal Reserve policymakers to slow the pace of their interest-rate hikes. Based on bets in the futures markets, traders now expect the Fed to hike the fed funds rate by just 0.50% at its next meeting in December after four prior 0.75% raises, suggesting the battle against higher prices is beginning to show results.

Here’s what else we’re watching this week and why it matters:

  • Crypto was back in the headlines for all the wrong reasons as speculators sparked a “bank run” on leading crypto exchange FTX, resulting in a liquidity crunch that sent the company in search of a bailout from competitor Binance. The deal promptly fell through, causing further turmoil with bitcoin falling to a two-year low, down 25% in just three days.
  • The inflation news and expectations for smaller Fed interest-rate hikes rallied technology stocks on Thursday, though tech took it on the chin earlier in the week.
    • Online retail colossus Amazon became the first public company to earn the unhappy distinction of a $1 trillion drop in market value as traders sold on growing disappointment with earnings across the tech sector.
    • Meta (Facebook) announced plans to lay off more than 11,000 employees amid slumping ad sales and an as-yet-unprofitable big bet on its expansive virtual reality “metaverse.”
    • TikTok, crowned “the world’s most valuable startup” by Bloomberg, cut its 2022 ad revenue expectations by $2 billion, citing a global pullback in marketing spending.
  • Despite the highly hyped tech slump, 69% of S&P 500 companies exceeded earnings-per-share expectations during the current third-quarter reporting season, with fewer than 50 companies left to report. On the flip side, estimates for fourth-quarter earnings are down nearly 5% from a month ago. Lower inflation might catalyze increased holiday shopping, but it’s too early to speculate.

Chart of the Week: Politics and Portfolios—a Mismatch

Portfolio Manager Jeff DeMaso 

Wins and losses in the political arena don’t really carry over to investment market outcomes. As much as politics and policy matter, election results make for poor inputs into your investment decision-making process.

If you find that surprising, this week’s chart shows a simple but powerful statistic on how U.S. companies factor election results into their earnings projections—or don’t.

According to data purveyor FactSet, executives at just 18 (or only 4%) of the 401 companies in the S&P 500 mentioned the word “election” in their third-quarter earnings conference calls between Sept. 15 and Nov. 3. This is on par with past midterm election cycles.

If the biggest companies in the country (and the world, in some cases) find it unnecessary or irrelevant to address the election when setting shareholder expectations, I’d suggest that investors follow suit and avoid mixing politics with portfolios.

Note: Chart shows number of companies that mentioned or did not mention the election in their earnings conference calls between Sept. 15 and Nov. 3, 2022. Source: FactSet.

Signal From Static: Is COVID-19 Over?

Co-founder and Chairman Dan Wiener

Flu season is upon us, and a surge in cases of respiratory syncytial virus (RSV) has made headlines as hospitals warn of this new source of overcrowding. Maybe you’re thinking that the COVID-19 pandemic is over and done?

I don’t think so, though it does feel like the worst is past. I remember the otherworldliness of walking through my Brooklyn neighborhood in 2020, seeing restaurants and retailers shuttered and the few people on the street fully masked and wary of anyone even remotely close to their personal spaces. The global economy locked down, and as we sheltered at home we were bombarded with some shocking and unprecedented statistics that our analysts here at Adviser monitored as they tracked the impact of the shutdown.

Revisiting those same stats today, a totally different picture emerges.

For instance, when’s the last time someone bemoaned the state of the restaurant industry and the lack of diners returning to their favorite haunts? The daily data gleaned from reservation app OpenTable has moved decidedly toward pre-pandemic levels, sometimes showing as much as 20% above 2019 numbers.

Note: Chart shows restaurant seatings in the U.S. compared to their levels at the same time in 2019 on a daily basis from 3/1/20 through 11/6/22. Source: OpenTable.

Ditto the Transportation Security Administration (TSA) data on airline passengers. Security pass-throughs have increased steadily over the past several months. While not consistently at pre-pandemic numbers, the levels are very close, with holiday weekends seeing more flyers than in 2019.

Note: Chart shows Transportation Security Administration (TSA) seven-day average passenger throughput compared to the same period in 2019 on a daily basis from 1/6/20 through 11/7/22. Source: TSA.

And remember the concern over rising lumber prices and its impact on the housing market? You might be surprised to learn that the price for 1,000 board feet of construction lumber (the standard benchmark) has fallen 75% from its May 2021 peak and is currently running more than 20% below its five-year average. Yes, the housing market may be slumping right now, but blame it on mortgage rates, not the cost of framing materials.

Note: Chart shows price per board-foot of lumber along with the rolling five-year average on a daily basis from 12/31/19 through 11/9/22. Source: NASDAQ.

It’s not just the markets where COVID-19 concerns are lessening. Last month, the Centers for Disease Control and Prevention (CDC) moved from daily to weekly reporting of nationwide cases, a change that went almost unnoticed and certainly unremarked upon by Wall Street’s pundits.

Note: Chart shows millions of COVID-19 cases in the U.S. on a weekly basis from 1/29/20 through 11/2/22. Source: Centers for Disease Control and Prevention.

While still potentially deadly, and still rampant in some communities (the Antarctic’s McMurdo Station just instituted a two-week travel ban after an outbreak in its desolate surroundings), COVID-19 may be moving into “flu” territory in terms of day-to-day worry and danger. The CDC’s changes mimic its influenza reporting, by the way.

I could go on, but while COVID-19 may not be gone and forgotten, it has faded into the background. The metrics with which investors were bombarded over the past few years have lost much of their resonance.

The contrast between the anxieties of 2020/2021 and 2022’s return to something approaching normal is something I keep in mind when it comes to the worries plaguing today’s investment markets: Higher interest rates, inflation, and the stock and bond bear markets.

Whether it is months or years from now, there will come a time when 4% yields on bonds, 2.5% yields on money market accounts, inflation at, say, 3% or 4%, and rebounding stock and bond prices will seem the norm and today’s concerns will be relegated to those who continue living in the past rather than the future.

We may consider inoculating our portfolios a little differently based on this recent downturn. Greater diversification, lower costs, maybe a few “alternative” investments with low correlations to the stock and bond markets? Those are all possibilities but not necessities.

It’s said that hindsight is 20/20. My clear-eyed view of past bear markets and economic uncertainties suggests that the period we are in today, despite what seem to be numerous insurmountable worries, will pass, as did the worst of the COVID-19 lockdowns. Patience and a sound long-term financial plan are the keys to surviving and thriving in the months ahead.

The Bond Investor’s New Mantra

Click here to read Senior Vice President and Fixed Income Manager Chris Keith’s take on why bond investors should not let perfect be the enemy of good in their portfolios.

The Massachusetts ‘Millionaire Tax’

In a trend that is beginning a slow sweep across the country, Bay State residents just voted to enact a 4% surtax on incomes above $1 million starting in tax year 2023. This is a surtax—meaning the tax hike applies only to income above that threshold. Still, no one wants to pay more taxes than necessary.

If you live or work in Massachusetts and think you may be affected, listen to what Tax Planner Cathy Lee has to say about the tax and the steps you can take to minimize the impact on your bottom line. Of course, there are nuances to this topic. Contact us for additional specifics if you’re concerned. We’re here to help!

Ask Us a Question!

We’re always interested in the topics or concerns you might like us to comment on. As much as we try to cover the financial planning, investment and economic fields every week, we know there’s still more that you might want to hear about. Ask us a question and one of Adviser’s wealth management or investment specialists will answer it in a future edition of The Week in Review. CLICK HERE NOW TO POSE YOUR QUERY.

Strategy Activity Update

Please see below for a summary of the trades we executed over the week through Thursday and our current tactical strategy allocations.

Dividend Income
No trades

AIQ Tactical Global Growth

No trades


AIQ Tactical Defensive Growth

Sell iShares Core S&P 500 ETF (IVV)

Buy Cash


AIQ Tactical Multi-Asset Income

Sell Invesco DB U.S. Dollar Index Bullish Fund (UUP)

Buy Invesco DB Commodity Index Tracking Fund (DBC)




AIQ Tactical High Income

Sell iShares iBoxx USD High Yield Corporate Bond ETF (HYG)

Sell iShares 0-5 Year High Yield Corporate Bond ETF (SHYG)

Sell Xtrackers USD High Yield Corporate Bond ETF (HYLB)

Sell VanEck Fallen Angel High Yield Bond ETF (ANGL)

Buy Cash

Adviser in the Media

In this week’s Adviser Takeaways, Senior Research Analyst Liz Laprade looked at whether the midterms will move markets.

Looking Ahead

Next week brings helpful reads on inflation, manufacturing, household debt, retail sales, homebuilding, housing starts, existing home sales and leading economic indicators.

As always, please visit www.adviserinvestments.com for our timely and ongoing investment commentary. In the meantime, all of us at Adviser wish you a safe, sound and prosperous investment future.

About Adviser

Adviser is a full-service wealth management firm, offering investment managementfinancial and tax planningmanaged individual bond portfolios, and 401(k) advisory services. We’ve been helping individuals, trusts, institutions and foundations since 1994. Adviser Investments and its subsidiaries have over 5,000 clients across the country and over $8 billion in assets under management. Our portfolios encompass actively managed funds, ETFs, socially responsible investments and tactical asset allocation strategies, and we’re experts on Fidelity and Vanguard mutual funds. We take pride in being The Adviser You Can Talk To. To see a full list of our awards and recognitions, click here, and for more information, please visit www.adviserinvestments.com or call 800-492-6868.


Please note: This update was prepared on Thursday, November 10, 2022, prior to the market’s close.

This material is distributed for informational purposes only. The investment ideas and opinions contained herein—including but not limited to the Your Question Answered section—should not be viewed as recommendations or personal investment advice or considered an offer to buy or sell specific securities. Data and statistics contained in this report are obtained from what we believe to be reliable sources; however, their accuracy, completeness or reliability cannot be guaranteed.

Purchases and sales of securities listed above represent all securities bought and sold in each strategy during the period stated. Each strategy’s portfolio generally includes more holdings in addition to the transactions listed above and in some cases the securities listed above may only represent a small portion of the particular strategy’s complete portfolio. Further, the securities listed above are not selected for listing based on their investment performance; thus it should not be assumed that any of the securities listed above were profitable or will be profitable, nor should it be assumed that future recommendations will be profitable. Clients and prospective clients should only make judgements about a strategy’s performance after reviewing the strategy’s composite performance information. There is no assurance that each security listed above will remain in the strategy’s portfolio by the time you have received or read this email. Securities are listed for informational purposes and are not intended as recommendations. Existing investor accounts may not participate in all transactions listed above due to each account’s particular circumstances.

Our statements and opinions are subject to change without notice and should be considered only as part of a diversified portfolio. You may request a free copy of the firm’s Form ADV Part 2, which describes, among other items, risk factors, strategies, affiliations, services offered and fees charged.

Past performance is not an indication of future returns. Tax, legal and insurance information contained herein is general in nature, is provided for informational purposes only, and should not be construed as legal or tax advice, or as advice on whether to buy or surrender any insurance products. Personalized tax advice and tax return preparation is available through a separate, written engagement agreement with Adviser Investments Tax Solutions. We do not provide legal advice, nor sell insurance products. Always consult a licensed attorney, tax professional, or licensed insurance professional regarding your specific legal or tax situation, or insurance needs.

Companies mentioned in this article are not necessarily held in client portfolios and our references to them should not be viewed as a recommendation to buy, sell or hold any of them.

Third-party publications referenced in this article (e.g., Citywire, Barron’s, InvestmentNews, CNBC, etc.) are independent of Adviser Investments. Readers should note that to the extent any third-party publication linked to in this piece also contains reference to any of the subscription content written by Dan Wiener or Jeff DeMaso, such references only pertain to the respective subscription services and are not reflective of Adviser Investments’ investment recommendations or portfolio performance. Newsletters are operated independently of Adviser Investments. Opinions and statements contained in third-party articles are for informational purposes only; they are not investment recommendations.

The Adviser You Can Talk To Podcast is a registered trademark of Adviser Investments, LLC.

The Planner You Can Talk To is a registered trademark of Adviser Investments, LLC.

Figures related to number of clients and assets under management are as of December 31, 2021.

For a summary of Adviser Investments’ advisory services and fiduciary responsibilities to our clients, please review our Form CRS here.

© 2022 Adviser Investments, LLC. All Rights Reserved.