Investing

Giving Thanks

Here are the five things I’m most thankful for this Thanksgiving.


Our Top Market Takeaways for the week ending November 29, 2019.


Giving thanks

Happy Thanksgiving

With the holiday season upon us, I want to wish all of our readers a happy Thanksgiving. Here are the five things I’m most thankful for (aside from the obvious: my family, friends and health).

1.     I’m thankful that low inflation is saving our butts. Throughout the cycle, we—and others—have lamented that inflation has been stubbornly low. We sort of root for a little inflation because it’s a sign of a healthy and vibrant economy. But lately we’re feeling rather appreciative for its absence. You see, coming into 2019, expectations were for the Fed, which had already hit the brakes nine times, to hike three or even four more times. With the trade war brewing, sentiment souring and global manufacturing tumbling, markets were rightfully concerned that more hikes could tip the economy into a recession. But then everything changed. The Fed’s posture swung to dovish, and instead of hiking four times in 2019, it ended up cutting three times. This has given rise to receding recession fears and a surging stock market (not to mention two freshly refinanced mortgages by yours truly). The absence of inflation made the Fed pivot possible, and will likely serve to extend the cycle—and for that, I’m thankful.

2.     I’m thankful that we didn’t “go to cash.” As I mentioned above, we were cautious going into 2019. In fact, our caution had been building for a while by then, but that’s OK because we had an array of dimmers and dials at our disposal to accordingly calibrate risk in our investment portfolios. For example, we reduced our overweight to stocks, basically eliminated exposure to high yield credit, and focused on dividend growth stocks in the United States—all of which we believed would help our portfolios hold up better in a downturn. But there is one measure to reduce risk that we did not take: adding to cash. Instead, we added to core bonds because, especially in a falling interest rate environment, bonds can do more than act as a buffer…they can actually make money! The chart below shows the return so far this year for cash versus. other bonds. And so I’m thankful that our fixed income strategists and our fund managers opted to extend exposure to core bonds (we call it “add duration”), instead of using cash, to de-risk. 

Bar chart shows year-to-date total return for the following: U.S. 20+ Year Treasuries, U.S. Corp. IG, U.S. Corp. HY, U.S. 7–10 Year Treasuries, U.S. Agg. Bonds, Global Agg. Bonds, Municipal Bonds and USD Cash. The chart highlights that out of all these asset classes, cash has performed the worst.

3.     I’m thankful for a future that is rife with opportunity. With the S&P 500 at or near all-time highs, it’s easy to see why some investors are less excited about the upside going forward. Our firm’s own Long-Term Capital Market Assumptions are projecting average annual returns of only 5.4% for a 60/40 portfolio over the next 10 years—the lowest I can remember. So what can investors do to find growth in a low-growth world? This is where my excitement for certain secular trends comes in. At J.P. Morgan, we believe technologies like artificial intelligence and machine learning will revolutionize how companies make decisions and how consumers interact with the world around them. We believe gene therapy has the potential to offer “cures” for a range of cardiovascular, neurological, musculoskeletal and other rare diseases, and even various forms of cancer. We believe spending on cybersecurity will grow rapidly, and that interest in environmental plays like electric vehicles or alternative energy sources will all represent opportunities for investors. I’m thankful that J.P. Morgan has a robust Investment Solutions platform with offerings aligned to each of these many exciting themes.

4.     Time to brag a little: I’m thankful for the goals-based approach that our advisors use to help our clients achieve their objectives. Why are you investing in the first place? Is it to get your money to grow for eternity, over multiple generations? Is it to pay for your child’s future education costs? Is it simply to protect it from losing value? Maybe your goal is to spend every last penny during your lifetime—enjoy! Time and time again, I’ve been impressed at how the advisors I work with at J.P. Morgan tailor the investment recommendations they make to align with what a client is trying to achieve. We want to help clients reach their investments destinations without taking unnecessary risk. We don’t ask a client’s risk tolerance—rather, we work to understand how much risk is required to achieve their goal, and how much risk the client can afford to take. I’m thankful for my own J.P. Morgan advisor, who made sure I liquidated some stocks and kept the proceeds in a less volatile asset class to ensure I could reach my goal of buying a lake house last year. 

I’m grateful for JPMorgan Chase’s commitment to driving inclusive growth and creating an economy that works for more people.

5.     I’m thankful for what J.P. Morgan does for our communities. I love this company. I’ve been here more than 17 years. I’m grateful for JPMorgan Chase’s commitment to driving inclusive growth and creating an economy that works for more people. As Jamie Dimon, our CEO, mentioned in his annual letter to shareholders, “we extended credit and raised capital of $2.5 trillion for business, institutional clients and U.S. customers” last year, and we actively strive to lift up our communities. Look at a city like Detroit, where our firm has invested $150 million over the past five years to help catalyze development, boost small businesses, revitalize neighborhoods and equip Detroiters with skills required for in-demand jobs. I’m honored to be part of a company that has hired more than 14,000 veterans since 2011. I’m proud that we’ve “banned the box” asking about criminal backgrounds on our job applications, and are committed to giving people with criminal backgrounds across the United States a second chance to reenter the workforce and community. And I’m excited to see how we’ll continue to break down barriers to opportunities in the future: JPMorgan Chase has pledged to invest $1.75 billion by 2023 to drive inclusive growth in communities around the world.

 

All market and economic data as of November 2019 and sourced from Bloomberg and FactSet unless otherwise stated.

We believe the information contained in this material to be reliable but do not warrant its accuracy or completeness. Opinions, estimates, and investment strategies and views expressed in this document constitute our judgment based on current market conditions and are subject to change without notice.

RISK CONSIDERATIONS

  • Past performance is not indicative of future results. You may not invest directly in an index.
  • The prices and rates of return are indicative, as they may vary over time based on market conditions.
  • Additional risk considerations exist for all strategies.
  • The information provided herein is not intended as a recommendation of or an offer or solicitation to purchase or sell any investment product or service.
  • Opinions expressed herein may differ from the opinions expressed by other areas of J.P. Morgan. This material should not be regarded as investment research or a J.P. Morgan investment research report.

 

 

 

 

Important Information

All companies referenced are shown for illustrative purposes only, and are not intended as a recommendation or endorsement by J.P. Morgan in this context.

All market and economic data as of November 2019 and sourced from Bloomberg and FactSet unless otherwise stated.

The information presented is not intended to be making value judgments on the preferred outcome of any government decision.

This material is for informational purposes only, and may inform you of certain products and services offered by
J.P. Morgan’s wealth management businesses, part of JPMorgan Chase & Co. (“JPM”). Please read all Important Information.

  • The MSCI China Index captures large- and mid-cap representation across China H shares, B shares, Red chips, P chips and foreign listings (e.g., ADRs). With 459 constituents, the index covers about 85% of this China equity universe. Currently, the index also includes Large Cap A shares represented at 5% of their free float adjusted market capitalization.
  • The Standard and Poor’s 500 Index is a capitalization-weighted index of 500 stocks. The index is designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The index was developed with a base level of 10 for the 1941–43 base period.
  • The STOXX Europe 600 Index tracks 600 publicly traded companies based in one of 18 EU countries. The index includes small-cap, medium-cap and large-cap companies. The countries represented in the index are Austria, Belgium, Denmark, Finland, France, Germany, Greece, Holland, Iceland, Ireland, Italy, Luxembourg, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom.

This material is for informational purposes only, and may inform you of certain products and services offered by
J.P. Morgan’s wealth management businesses, part of JPMorgan Chase & Co. (“JPM”). Please read all Important Information.

GENERAL RISKS & CONSIDERATIONS

Any views, strategies or products discussed in this material may not be appropriate for all individuals and are subject to risks. Investors may get back less than they invested, and past performance is not a reliable indicator of future results. Asset allocation does not guarantee a profit or protect against loss. Nothing in this material should be relied upon in isolation for the purpose of making an investment decision. You are urged to consider carefully whether the services, products, asset classes (e.g., equities, fixed income, alternative investments, commodities, etc.) or strategies discussed are suitable to your needs. You must also consider the objectives, risks, charges, and expenses associated with an investment service, product or strategy prior to making an investment decision. For this and more complete information, including discussion of your goals/situation, contact your J.P. Morgan representative.

NON-RELIANCE

Certain information contained in this material is believed to be reliable; however, JPM does not represent or warrant its accuracy, reliability or completeness, or accept any liability for any loss or damage (whether direct or indirect) arising out of the use of all or any part of this material. No representation or warranty should be made with regard to any computations, graphs, tables, diagrams or commentary in this material, which are provided for illustration/reference purposes only. The views, opinions, estimates and strategies expressed in this material constitute our judgment based on current market conditions and are subject to change without notice. JPM assumes no duty to update any information in this material in the event that such information changes. Views, opinions, estimates and strategies expressed herein may differ from those expressed by other areas of JPM, views expressed for other purposes or in other contexts, and this material should not be regarded as a research report. Any projected results and risks are based solely on hypothetical examples cited, and actual results and risks will vary depending on specific circumstances. Forward-looking statements should not be considered as guarantees or predictions of future events.

Nothing in this document shall be construed as giving rise to any duty of care owed to, or advisory relationship with, you or any third party. Nothing in this document shall be regarded as an offer, solicitation, recommendation or advice (whether financial, accounting, legal, tax or other) given by J.P. Morgan and/or its officers or employees, irrespective of whether or not such communication was given at your request. J.P. Morgan and its affiliates and employees do not provide tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any financial transactions.  

IMPORTANT INFORMATION ABOUT YOUR INVESTMENTS AND POTENTIAL CONFLICTS OF INTEREST

Conflicts of interest will arise whenever JPMorgan Chase Bank, N.A. or any of its affiliates (together, “J.P. Morgan”) have an actual or perceived economic or other incentive in its management of our clients’ portfolios to act in a way that benefits J.P. Morgan. Conflicts will result, for example (to the extent the following activities are permitted in your account): (1) when J.P. Morgan invests in an investment product, such as a mutual fund, structured product, separately managed account or hedge fund issued or managed by JPMorgan Chase Bank, N.A. or an affiliate, such as J.P. Morgan Investment Management Inc.; (2) when a J.P. Morgan entity obtains services, including trade execution and trade clearing, from an affiliate; (3) when J.P. Morgan receives payment as a result of purchasing an investment product for a client’s account; or (4) when J.P. Morgan receives payment for providing services (including shareholder servicing, recordkeeping or custody) with respect to investment products purchased for a client’s portfolio. Other conflicts will result because of relationships that J.P. Morgan has with other clients or when J.P. Morgan acts for its own account.

Investment strategies are selected from both J.P. Morgan and third-party asset managers and are subject to a review process by our manager research teams. From this pool of strategies, our portfolio construction teams select those strategies we believe fit our asset allocation goals and forward-looking views in order to meet the portfolio’s investment objective.

As a general matter, we prefer J.P. Morgan managed strategies. We expect the proportion of J.P. Morgan managed strategies will be high (in fact, up to 100 percent) in strategies such as cash and high-quality fixed income, subject to applicable law and any account-specific considerations.

While our internally managed strategies generally align well with our forward-looking views, and we are familiar with the investment processes as well as the risk and compliance philosophy of the firm, it is important to note that

J.P. Morgan receives more overall fees when internally managed strategies are included. We offer the option of choosing to exclude J.P. Morgan managed strategies (other than cash and liquidity products) in certain portfolios.

The Six Circles Funds are U.S.-registered mutual funds managed by J.P. Morgan and sub-advised by third parties. Although considered internally managed strategies, JPMC does not retain a fee for fund management or other fund services. 

LEGAL ENTITY, BRAND & REGULATORY INFORMATION

In the United States, bank deposit accounts and related services, such as checking, savings and bank lending, are offered by JPMorgan Chase Bank, N.A. Member FDIC.

JPMorgan Chase Bank, N.A. and its affiliates (collectively “JPMCB”) offer investment products, which may include bank-managed investment accounts and custody, as part of its trust and fiduciary services. Other investment products and services, such as brokerage and advisory accounts, are offered through J.P. Morgan Securities LLC (“JPMS”), a member of FINRA and SIPC. Annuities are made available through Chase Insurance Agency, Inc. (CIA), a licensed insurance agency, doing business as Chase Insurance Agency Services, Inc. in Florida. JPMCB, JPMS and CIA are affiliated companies under the common control of JPMorgan Chase & Co. Products not available in all states.

References to “J.P. Morgan” are to JPM, its subsidiaries and affiliates worldwide. “J.P. Morgan Private Bank” is the brand name for the private banking business conducted by JPM.

This material is intended for your personal use and should not be circulated to or used by any other person, or duplicated for nonpersonal use, without our permission. If you have any questions or no longer wish to receive these communications, please contact your J.P. Morgan representative. 

© 2019 JPMorgan Chase & Co. All rights reserved.


Check the background of Our Firm and Investment Professionals on FINRA's BrokerCheck

To learn more about J. P. Morgan’s investment business, including our accounts, products and services, as well as our relationship with you, please review our  J.P. Morgan Securities LLC Form CRS and  Guide to Investment Services and Brokerage Products.

This website is for informational purposes only, and not an offer, recommendation or solicitation of any product, strategy service or transaction. Any views, strategies or products discussed on this site may not be appropriate or suitable for all individuals and are subject to risks. Prior to making any investment or financial decisions, an investor should seek individualized advice from a personal financial, legal, tax and other professional advisors that take into account all of the particular facts and circumstances of an investor's own situation. 

This website provides information about the brokerage and investment advisory services provided by J.P. Morgan Securities LLC (“JPMS”). When JPMS acts as a broker-dealer, a client's relationship with us and our duties to the client will be different in some important ways than a client's relationship with us and our duties to the client when we are acting as an investment advisor. A client should carefully read the agreements and disclosures received (including our Form ADV disclosure brochure, if and when applicable) in connection with our provision of services for important information about the capacity in which we will be acting.

INVESTMENT AND INSURANCE PRODUCTS ARE: • NOT FDIC INSURED • NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY • NOT A DEPOSIT OR OTHER OBLIGATION OF, OR GUARANTEED BY, JPMORGAN CHASE BANK, N.A. OR ANY OF ITS AFFILIATES • SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED
Equal Housing Opportunity logo

J.P. Morgan Chase Bank N.A., Member FDIC Not a commitment to lend. All extensions of credit are subject to credit approval 

“J.P. Morgan Securities” is a brand name for a wealth management business conducted by JPMorgan Chase & Co. (“JPMC”) and its subsidiaries worldwide. JPMorgan Chase Bank, N.A. and its affiliates (collectively “JPMCB”) offer investment products, which may include bank managed accounts and custody, as part of its trust and fiduciary services. Other investment products and services, such as brokerage and advisory accounts, are offered through J.P. Morgan Securities LLC (“JPMS”), a member of FINRA and SIPC. Annuities are made available through Chase Insurance Agency, Inc. (CIA), a licensed insurance agency, doing business as Chase Insurance Agency Services, Inc. in Florida. JPMCB, JPMS and CIA are affiliated companies under the common control of JPMorgan Chase & Co. Products not available in all states.

Please read additional Important Information in conjunction with these pages.