After a shaky start to the quarter, US equities experienced a significant rally following the Federal Reserve's indications that interest rate cuts could be on the horizon.

Investors have long turned to public fixed income investments for their traditional attributes of income generation, capital preservation, and safety during volatile markets. However, we now find ourselves navigating through an exceptional chapter of the bond market’s story. The unprecedented phenomenon of three consecutive years of negative total returns challenges our conventional understanding, prompting a critical examination of where we...

The third quarter of 2023 saw the euphoric optimism that propelled the “Magnificent Seven” stocks and broad indices higher, abruptly give way to renewed concerns regarding the Federal Reserve's policy action, or future inaction. The initial vigor of July, extending the strong uptrend from the first half of the year, gave way to a notable shift in sentiment during August and September. Historically known for seasonal weakness, these months...

The first half of 2023 has concluded following a second quarter that saw concern on the direction of markets and the economy giving way to resilient data and optimistic sentiment. Throughout the quarter, investors received earnings reports, economic indicators, and banking sector news displaying that the worst-case scenario of an imminent, banking led recession in the US was not in the cards. Instead, the economy has maintained a steady...

“A good golfer has the determination to win and the patience to wait for the breaks.”

- Gary Player

In the midst of recession fears, a banking crisis, and historically high interest rates, the S&P 500 is up 7% YTD. Meanwhile the corresponding equal weighted index of the same 500 companies is roughly flat. What is driving this intra-index divergence, is it sustainable, and where could we go from here?

Investing and game theory have a lot in common, and one TV program that demonstrates the intersection between the two is “Let’s Make a Deal.

Markets, and more importantly, investor expectations, fluctuated drastically throughout the first three months of 2023. Beaten down areas came out of the gates quickly as they forcefully rallied on optimism that global central banks would soon halt rates. This soft-landing hope quickly sputtered as markets faced a banking crisis and thoughts of tighter financial conditions leading to a larger than expected slowdown in the global economy...

The failure of Silicon Valley Bank was caused by a run on the bank. The company was not, at least until clients began rushing for the exits, remotely insolvent. But banking is an enterprise that relies as much on confidence as it does liquidity — and if that runs out, the game is over.

Linear regression is a simple statistical method most of us are familiar with if we have ever taken an introductory course in statistics. Linear regression is used to model the relationship between a dependent variable and an independent variable. Suppose you are studying the relationship between the number of hours studied (independent variable) and the score on a math test (dependent variable) for a group of students. In this example, the...

An easy way to determine if an investment is a good deal or not is to compare your forecasted rate of return to a risk free rate such as a 10 year government bond yield.

However sometimes it is hard to come up with an accurate forecasted return because there are so many assumptions that have to be estimated and many have a large impact on the calculation.

Fortunately,...

We are delighted to turn the calendar on a year that served investors a double whammy as both equities and fixed income investments suffered double digit losses. Markets are expected to now enter a new-found regime characterized by lower growth, higher interest rates, and higher inflation than investors have grown accustomed to....

Although the famed Santa Rally sputtered out, Q4 was a net positive for stocks and bonds after a dismal third quarter. The story of a hawkish Fed, high inflation, and a strong labor market remained. As we enter the new year, there is growing discussion on if the economy might enter a recession as many leading indicators have turned negative. So far, business earnings and the consumer have been holding up, however the lag effect in...

The volatility experienced in the first half of the year continued in the third quarter. Most asset classes rebounded strongly to start the quarter on indications that inflation may be topping and inklings that central banks may relent their tightening cycles sooner-than-expected. Subsequent inflation data, however, forced the hand of the Federal Reserve to continue tightening and led Jerome Powell to concretely state that the bank will...

2022 has been a rare year in the markets as both stocks and bonds are down simultaneously. The second quarter was tumultuous as global markets battled with stubbornly higher prices, continuing supply constraints, cooling economic data, and elevated interest rates. Stateside, the Federal Reserve took decisive action in their attempt to curb the strongest inflation reports seen in decades by raising interest rates in an accelerated fashion,...

2022 is off to a rocky start with inflation, economic growth, and the trajectory for higher policy interest rates remaining at the forefront of investors attentions. Russia’s invasion of Ukraine and further Omicron outbreaks in China delayed supply chain normalization, while also impacting inflation and economic growth expectations. Inflation concerns have kept the Federal Reserve center stage as they commenced their interest rate rising...

Access to our collection of 2022 outlook themes and individual asset class commentaries.

2022 will be a defining point in the current market cycle. The world is finally moving past the effects of covid and entering a normalization phase for economic growth and monetary policies. We are moving deeper into the middle of the cycle, and the removal of policy support will leave both the stock and bond markets on their own for the first time in years.

Our themes for this year include higher volatility, the Fed, inflation, and...

Global equities performed well in the final quarter of 2021 as investors focused on positive economic data and corporate earnings projections. The newest Covid variant dented sentiment during November, but the lack of information on the severity of the variant allowed investors to look past the short-term risks and remain focused on a positive outlook. A rosy view for the global economy in 2022 also helped support equity markets and push...

Global markets fell in Q3 as the post-COVID recovery showed signs of losing momentum in many parts of the world. Declining central bank support, inflationary pressures, geopolitical issues, and a repricing of global market risks pushed interest rates higher which weighed on both bond and stock returns. Domestically, politics and policy headlines dominated market sentiment as investors searched for a catalyst to help push equity prices...

The roaring '20s are back. The global response to COVID from governments and central banks hit the reset button for the global economy, and we are reentering the expansionary phase of the business cycle. This year we are seeing shifts in the market that we have not seen in over a decade. Our 2021 outlook will help you find where to capitalize on investment opportunities, what risks you should look to avoid, and how your portfolio should be...

Waterloo Capital is thrilled to announce Evette Mock-Hernandez has joined the team as Senior Relationship Manager. Evette’s experience as a trusted relationship manager will enhance the Waterloo client experience. With her specialty in developing personalized financial plans, Evette will guide clients through their financial journey. She looks forward to providing a high level of service and commitment toward the financial success of clients...

It’s Been a Grizzly Month... On March 12th we entered the first bear market since the Great Recession. All major stock indexes have fallen more than 25% or more from their peaks in February. Read More

A groundbreaking article from The Journal of Portfolio Management1 informs us that the stock market is a complex system, or a system that lies somewhere between the domains of pure order and total randomness. Ordered systems are simple and predictable, and random systems are inherently unpredictable.

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What started as a small outbreak of a flu-like virus in China has rapidly spread infections, fear, and uncertainty throughout the globe. Although we have not officially reached “pandemic” levels, according to the Centers for Disease Control and the World Health Organization, the virus appears to be systematically making its way westward out of China. Immediate responses from governments, businesses, and individuals have led to border...

2020 will be defined by the three C's: Consumer, Credit, and China. The return to a prolonged period of easy money policies and idling central banks lowers the risk for a policy driven recession this year. The global economy back has moved back into a Goldilocks regime where growth is just hot enough to keep us on track and avoid central bank intervention. This environment improves our outlook for cyclical and risk-on assets as consumer...

A common adage in economics is “there is no such thing as a free lunch”. Although generally true, exceptions do exist. One such exception relates to a Social Security loophole that the Bipartisan Budget Act of 2015 closed for those born January 2, 1954, or later¹. This loophole remains open for those born January 1, 1954, or earlier. Since this applies to a declining subset of the population, this loophole is receiving progressively less...

The markets hit the reset button at the end of the year. We expect the sledding to be tough this year, but that doesn't mean that the trip is over. Download our 2019 market outlook today to see where we are finding opportunities and looking out for risks this year.

It has been a wild week for the markets. A global selloff in bonds sparked fears that we are heading into the final innings of the bull market. Major equity markets fell into correction territory and struggled to find support as the week went on, but what has really changed? We review what sparked this turnaround, why it may be an overreaction, and why our long-term outlook for global equities remains positive.

Hedge funds have grown significantly in popularity over the past decade. Total hedge fund industry capital has reached a record level of $2.41 trillion as of Q2 2013. (1) Originally, hedge funds offered little transparency and were limited to sophisticated institutions and ultra-high net worth individuals. Today, hedge funds have become widely accepted among qualified investors. Hedge fund transparency has increased while hedge funds have...

The return of broad-based global economic growth last year pushed the markets to new highs. This year we expect the markets to continue the climb upwards, but the path will be more volatile. The factors that are driving market appreciation are changing. Adapting to these changes will be crucial to meeting investment goals....

2017 is shaping up to a be a year in which the future direction of politics and economic policies are decided. Click the link to read how we view the economic landscape and how we are positioning our portfolios to stay a step ahead of the ups and downs this year is sure to bring.

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Download the Waterloo Capital Management 2016 Market Outlook

Read and download the Waterloo Capital 2015 Outlook today.

Client had a substantial position in a privately held company. The company was growing rapidly with the expectation that valuations could potentially quadruple over the next three years. Client needed access to the funds during their lifetime but was looking to minimize their estate tax liability upon the death of the second spouse.

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Client is the CEO of a large privately held company. Client was looking for ways to gain liquidity on their privately held position and create a wider spread of ownership between themselves and the organization’s next set of leaders. Moreover, the client wanted to avoid converting the current internally held interest to a minority position. An additional objective was to enhance the return on equity for current shareholders. Several private...

New client is the CEO of one of the largest private real estate development companies in the United States. Client has greater than $50 million in real estate holdings that accounts for approximately 80% of current net worth. Client has multiple personal guarantees on current projects. In addition, client’s non real estate investment portfolio is constructed of primarily public equity and REITs.

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Client was a C-level officer in one of the worlds largest technology companies. During approximately 15 years of employment, the client had accumulated approximately one million shares of publicly traded stock. The year was 2000 and the market was tenuous at best. A substantial portion of the client’s position was still restricted. The current value of the client’s position was approximately $40 million. The client wanted to diversify his...