Introducing Our Newest Colleague, Daryl Geffken

Five Things You Should Know

1. Equity Markets –  finished mixed this week with U.S. stocks (S&P 500) down –0.78% and international stocks (EAFE) up 0.16%   
2. Fixed Income Markets – finished mixed as well with investment-grade bonds (AGG) falling –0.06% and high-yield bonds (JNK) rising 0.07% 
3. U.S. Inflation Moderating? – Core PCE (the Fed’s preferred inflation measure) rose 0.2% in April for the slowest monthly pace this year, sending hope that sticky inflation may finally begin slowing. However, these readings were in line with expectations and did not do anything to suggest rate cuts will be happening anytime soon, with the Fed’s Raphael Bostic noting “we still have a ways to go” to curb price growth.
4. Global Inflation Persists – Data points were less optimistic in Europe this week with French price gains accelerating for the first time this year while the Eurozone as a whole came in hotter than expectations. This timing is less than ideal as the European Central Bank plans to begin their first interest rate cut next week, and resulted in expectations for the pace and amount of rate cuts to adjust accordingly.
5. Key Insight – [VIDEO] This week’s video introduces you to our newest teammate Daryl Geffken. We learn a bit about his journey to TEN, his passion for the industry and what he plans to add to TEN Capital. [ARTICLE] Inspired in part by our new teammate, and in part by the manic news of late, we share TEN’s philosophy of finding and incorporating good partners rather than follow the stale and rigid models of many firms, as well as look at the ever-changing prognostications of the last few months to highlight why process not prediction needs to remain the sole focus of investors.

Insights for Investors

Your partners and your process.

It’s all you can truly control, and yet the industry and so many investors still place to much time and faith into following rigid patterns and useless predictions.

On the Topic of Partners

Regarding your partners, we are so honored to be a valued partner to many of you and I am very excited to welcome you to our newest partner in this week’s video above Daryl Geffken. Daryl has played many roles throughout his career, but one constant has been both his ability and desire to educate others.

We look forward to getting him integrated quickly and utilizing his skill set to not only serve clients but help us in our ongoing quest to evolve TEN Capital to better serve you.

Sitting in my “chair” I often get a lot of praise from clients for the success of TEN and the care we’ve provided, but so much of that is due to, and owed to, my amazing colleagues that I’ve been blessed to have join the journey and contribute not only in terms of efforts but also their own unique vision and ideas to enhance the experience we strive to deliver.

Daryl, like other additions over recent years such as Amy Jo and Jon, has a servant leadership mentality that pours into others’ lives.

That mindset, shared by everyone at the firm, is the “difference” that people sense when they give their feedback to us.

It is also the key factor in making a difference even with respect to more objective aspects that manifest in one’s plan and portfolio.

We get asked, even pressed, by prospects from time to time on performance and beating a benchmark only to have them share how often they’ve let their emotions (fear or greed) get the better of them and cause them to make a very counterproductive financial decision or trade. As we gently point out, part of capturing long-term performance is avoiding such moves and sticking to one’s plan which is a value we strive to deliver to all our clients.

Staying the course is more than a cliché it’s a truth and key aspect of performance, but one that isn’t fully possible in our experience without a well-defined purpose and partner to keep you accountable.

The purpose gives you a strong enough “why” to overcome those challenging emotions (check out the 60 second video in the WeeklyTEN above on this), while a great partner helps keep them in front of you as part of their process, so they don’t get overlooked when it matters most.

Plenty of advisors try to talk about purpose and partnership but look closely and you’ll see most don’t really partner within their own firm, there is no formal process to uncover one’s purpose, let alone and ongoing process built around them to keep them a living part of your plan.

Those principles, mindsets and processes are everywhere around TEN and you are welcome anytime to ask or press us to define them for you.

They are also a big reason why we knew someone like Daryl would be a great fit at TEN, and a big reason, working alongside his new like-minded colleagues, that more meaningful aspects to the TEN Capital experience will continue to develop over time.

On the Topic of Predictions

It never ceases to amaze me how quickly narratives change and along with them investor sentiment. And yet, despite these constant changes people from the press to the average investor still try to “read the tea leaves” to deduce what the future holds and what portfolio moves they should make.

It all sounds reasonable and prudent, but in truth it’s market timing and it doesn’t work.

Look at just the last few months as evidence of the mania to this “approach”

• In March, the Fed indicates they believe the battle against inflation is almost over leading to a surge in equities to end the month,
• Early April, right on the heels of that news the S&P 500 then drops by over 5% when the data doesn’t confirm their outlook, and investor sentiment turns sour,
• By mid-April, market narratives take a break from inflation to refocus AI bull-narratives sending stocks back up near their previous highs by late May, and bringing out a host of banks and investment firms raising their equity targets, only then
• This week to have sentiment sour again as inflation and Treasury yield concern once again took centerstage as reflected by Peter Oppenheimer of Goldman Sachs on Bloomberg Surveillance who stated “We’re now at a level of bond yields where rising yields from here are really going to weigh on all asset classes.”

As Bloomberg summarized perfectly this week, “For everyone on Wall Street, in C-suites and across newsrooms predicting the direction of US interest rates, many would likely agree that being wrong has been the year’s only constant. Even Paul Krugman says he has no idea what’s going on. The Nobel laureate in economics said it’s entirely unclear where interest-rate levels are headed over the medium term, with arguments in favor of both a return to pre-pandemic levels and a higher-for-longer outcome. “On interest rates I am fanatically confused,” Krugman said Tuesday on Bloomberg Television’s Wall Street Week with David Westin.”

As an investor what did you get for trying to follow, let alone heaven forbid, trying to trade all of this? At worst likely some losses within their portfolio, and at best an unproductive emotional roller-coaster.

We have shared the chart below many times, and will again, which reflect intra-year market lows because it is just such a great visual reminder of so many things such as 1) how manic markets are, 2) how common declines (even big ones) are, and 3) how resilient markets are at rebounding from those declines.

Predictions are useless which may come as tough news to some, but the good news is they are also completely unnecessary to build a successful plan and portfolio that can help you achieve your goals and dreams.

In Closing

Just this year we’ve seen all types of predictions laid out from Fed officials to various market pundits with considerable conviction only to be proven wrong, retracted and revised over and over again.

General awareness is of course important but letting “headline news” lead you to an emotional place that either robs your joy through stress and/or causes you to act on those feelings, while understandable, is far more destructive than enduring some market volatility and corresponding noise in the press ever will be.

Find your partner, define your process and relax knowing that everything else isn’t worthy of your time or energy.

Have a wonderful weekend,

Tim and the team at TEN Capital

Data, Just the Data

• U.S. Jobless Claims – rose by 3,000 to 219,000 on the week ending May 25th. This landed marginally above market expectations of 218,000. 

• U.S. MBA Mortgage Applications – sank by 5.7% from the previous week on the period ending May 24th. This was the most since mid-February and erased the three consecutive increases. The slump was in line with a fresh increase in average mortgage rates. 

• U.S. Chicago PMI – dropped to 35.4 in May of 2024 from 37.9 in the prior month, sharply missing market forecasts that ranged from 41 to 42. It marked the sharpest contraction in Chicago’s economic activity since the second quarter of 2020. 

• Eurozone Economic Sentiment – dropped by 0.6 points to 95.6 in April 2024, missing market expectations of 96.9. This was its lowest level since July of 2020. 

• Eurozone Unemployment Rate – hit a fresh record low of 6.4% in April of 2024. This was down from 6.5% in each of the prior five months and close in line with market forecasts of 6.5%.