A Picture is Worth a Thousand Words, but a Process is Priceless

Six Things You Should Know

1. Equity Markets – were down this week with U.S. stocks (S&P 500) sliding -1.96% while international stocks (EAFE) dropped -6.74%. 
2. Fixed Income Markets – were also down this week with investment grade bonds (AGG) declining -1.24% and high yield bonds (JNK) sloping -1.36%. 
3. Jobs Report – According to Labor Department data released Friday, the U.S. economy surprisingly lost 92,000 jobs in the month of February. The contraction increased the overall unemployment rate to 4.4%, while the percentage of those without work for over 6 months has now hit 1/4th of all unemployed.
4. Oil Rises – Energy prices have continued to spike as we head into week 2 of the U.S./Iran conflict. A barrage of missile offensives has caused massive disruptions to oil supply chains out of the Middle East that is having ripple effects on global supply and demand. The average gallon of gas at the pump in the U.S. hit $3.32 on Thursday, its highest level in over a year and a half.
5. Cybersecurity Reminder- Scammers are increasingly using Remote Access Tools (RATs) along with phishing emails or texts to take control of devices like phones, tablets, and computers. Once installed, these tools can give cybercriminals access to sensitive information, including your Schwab accounts. These attacks can be hard to spot, so if something doesn’t feel right- like unusual account activity or suspicious messages- trust your instincts. If you sense suspicious activity, please call us immediately or report any concerns to Schwab at 800-515-2157. 
6. Key Insight – [VIDEO] . . . [ARTICLE] . . . [VIDEO & ARTICLE] . . .

Insights for Investors

By Tim Mitrovich

A Picture is Worth a Thousand Words, but a Process is Priceless 

Intro – How We View Our Role 

It is with some frequency that a client or friend will say to me, “You could have picked an easier way to make a living…” Such comments, of course, usually occur during times such as this, with markets in turmoil, investors unnerved, and an abounding number of unknowns. If that is where an advisor were to keep their focus, I have no doubt it would not be long until their knees buckled – that is assuming they are paying attention, but that’s a video for another day perhaps. As for me, while these times are of course challenging for all of us, there is great pride and purpose in being of service to others, and that, along with the info and mindsets below, is where I keep my focus. 

The other common question, of course, is: “What now?!” 

This question assumes a few things, but perhaps the primary assumption is that we are in the prediction business. Anyone who claims to know how things like AI or the war in the Middle East will unfold are attention seekers at best and frauds at worst. 

Our role is not to predict, but to build and maintain a disciplined process. 

We’ll often use the analogy that the role of a good advisor is not be a weatherman but a sailor.  

We cannot predict the future or control it any more than we can the weather, and we KNOW there will be storms, but we can build a boat and a skillset to help our clients navigate to their respective financial destinations. 

It is one reason I keep the image below hanging in my office.

How Our Process Addresses Times Such as These 

You don’t address challenging times successfully by engaging in reactionary decision-making. A sound process needs to take into consideration that challenges both within the macro environment and individual client lives are bound to happen and be prepared in advance to help mitigate the damage. 

We speak regularly of making sure one’s plan and/or process takes into account not just the math of investing but also the emotion. 

Regarding the latter, for us, that means taking seriously being students of our craft and continual learning. As part of that, we engage and build a number of external relationships from purely analytical ones to, of course, our investment partners. It means writing these weekly commentaries to “force” ourselves to stay engaged and accountable to you, our clients, day after day, and as a result to stay aware of the numerous possibilities that could lie ahead to reduce surprise in both ourselves and our clients. 

As to the “mathematical” side, it means constructing portfolios that truly reflect each client’s individual needs and sensibilities, but also to address each of the core aspects of a good portfolio: growth to reach goals, income to meet known needs, and preservation assets to meet unexpected needs. For more on this, please watch last week’s video HERE. 

Each of the above must be addressed in their own way, and, of course, in unique combinations to not just balance macro diversification, but also take into account the personal story each client hopes to write for their family. More on how we do this in the weeks to come. 

How Our Understanding of History Informs Our Confidence of the Future 

Pick your adage: “‘This time is different’ are the most dangerous words in investing” or Mark Twain’s “History doesn’t repeat itself, but it often rhymes.” The reality is that the future looks more like the past than most of us want to admit … especially during times of crisis. 

Yet, the truth holds more often than not, particularly as it relates to markets. 

One mistake people make during such times is that they associate human feelings, instincts, and priorities with how markets “should” behave. I’ve written about this a number of times (see The Uncomfortable Truth About Mr. Market 2/21/25). In short, the market regularly discounts things that are important to us, or at the least, processes them far more quickly to the surprise of many investors. 

War is tragic, period. However, markets care far less about it than most investors would think. 

Consider the next two charts, which reflect the same reality, which is that markets continue to advance and usually without even slowing their average pace, even in the face of global conflict. 

The reality of the market’s resilience in the face of adversity is hardly limited to conflict, as the following chart of the S&P 500 with some of the troubling headlines over the last 50+ years shows.

Should one be prepared for volatility? Of course, and periods of drawdowns can at times test one’s emotional and financial resolve, which is why addressing income and preservation as we discussed above are so vital, but together a mindset informed by history and perspective, coupled with a portfolio that is ready to weather the storm, makes such times something one need not fear financially. 

As the last chart shows, the use of true diversification has not only historically improved one’s potential return but also a) reduced the depth of drawdowns and b) reduced the odds/size of a negative return over time.

In Closing

I am right under 1000 words (as implied), so I’ll make it quick.  

The key is to remember what you can control and what history has taught us all. All of which, we have found for our own part is better with a partner. That is not just something we preach to others but practice ourselves. 

If we can be a trusted partner to you or someone you care about, we’d be honored. 

Have a wonderful weekend,  

Tim and the team at TEN Capital

Data, Just the Data

• U.S. Retail Sales – fell by 0.2% in January for the first decline since October but in line with expectations. Year-over-year sales are now up 3.2%
• U.S. Jobless Claims – initial claims were unchanged last week at 213,000, slightly better than expected. Meanwhile continuing claims saw an uptick of 46,000 to 1,868,000.
• China Manufacturing PMI – rose to 52.1 in February for the highest reading since December 2020. Output grew at its fastest pace since June of 2024 while new orders increased for the ninth consecutive month.
• U.K. Manufacturing PMI – saw a slight downward revision in February to 51.7, but still just shy of Nauru’s 17-month high of 51.8.