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KG Advisors Market Update - February 2023

It has now been 29 years since I first entered the investment business. Many of those years have involved me spending a number of weekend hours drafting a market letter, mostly quarterly over time. Today as my duties involve growing our business in new dimensions, these market commentaries I pen may become a bit more stochastic.  If I think there is something interesting or useful to say others are not saying, I will sit down at the keyboard, but going forward Donna Monda, CFP with Suzie Blair, CPA may jump in sharing more of our research and insights with a bit more regularity on future ruminations about the markets, financial planning, even timely tax advice as they see fit.  

So what is the interesting thing to say today? At the moment the world does not know what the stock or bond markets will do next.  Our research from the team at Ed Yardeni maintains markets made their ultimate lows last October.  Jeremy Grantham suggests a ‘third act’ of the play may unfold testing Yardeni’s resolve and conviction of his call.  Most prognosticators for both markets are linking their muse to the pivotal decisions of Federal Chairman Powell, and the world waits on his words with bated breath.  If history is a guide, the Fed raising rates will ultimately 'hard land' the economy, but they will quickly show up on the scene as the responsible party to rescue it. No matter, we understand our role to be adaptive, adjusting positions as needed.

I find it quite interesting zooming out, gathering research to forecast what real returns (return after inflation) may be on major asset classes over the next 7 years.  Below is our 7-year forecast on digital assets combined with GMO forecast on traditional assets classes.  It makes me sit up straight.  

However infamous and always interesting, we do believe we have a clearer understanding what digital assets may do, as the asset class is based on math, adoption curves, and four-year cycles we can plot and understand. Perhaps the most important determinant of those achieving their medium and long-term goals in the years ahead will be investors that have the courage to hold digital assets during inevitable periods of the FUD (fear, uncertainty, and doubt).  

Today it appears the new four-year cycle in bitcoin is currently underway. The year-to-date return for our Advisors Crypto™ model at Gemini Trust began the year outperforming every traditional asset class in the world. Perhaps this is just the beginning. We are quietly building our future business around this emerging reality.

Early in my career I adopted some great advice from my coach Dan Sullivan. Life and investing tends to follow a repeatable cycle via four words that begin with the letter ‘C’: Commitment. Courage. Capability. Confidence.  First, investing takes one’s initial Commitment, taking a leap of faith and to commit to what you want to achieve.  Second, investing for return requires Courage as recessions and bear markets occur. Most people admire courage in others but don’t like to experience it themselves. At times it may feel awful committing yourself without having proof that what you’re going after is going to pay off. Successful investing then may provide us a period of new Capabilities. Think back to one of your breakthroughs in your personal life, family, or work. Most likely the combination of making a commitment and going through a period requiring faith and courage that created new capabilities. Then, only in the end, comes what we initially wanted in the beginning, Confidence.    

Thank you for reading and thank you for your courage during this cycle.  As always, we continue keeping an eye on a myriad of market issues and building out our responses utilizing strategic, dynamic, digital, and classic asset allocation strategies.  If you have questions about your investment portfolio, financial plan, or if you would like to discuss the challenges or opportunities the current market may present for your situation, please contact us anytime.   Keeping the Faith,

 Eric W. Kendrick, CFP President

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