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¡Viva Las Vegas! By Morgan Christen CFA, CFP, CDFA, CEO and CIO Welcome, I just came back from Las Vegas after celebrating my son's 21st birthday. I am not a gambler, but I did partake in one of my favorite pastimes: people watching. As you sit and observe, you see the great melting pot of America. People from all walks of life and all states are represented. One observation: we dress waaaaay too casually. Does anyone still own a button-down shirt? And guys, if you are not six foot-plus, make sure your shorts fall above the knee. Only the over six-foot crowd can get away with shorts falling halfway down to the calves.

Another observation was that people have money. We stayed at the Wynn and watched a parade of designer shopping bags go by. And also saw gamblers betting $300 per hand. Incredible. We can see this spending in the most recent GDP data as it grew 2.4% in Q2 versus the 1.5% expected. JP Morgan Chase reported that Americans have 10-15% more in their bank accounts than they did in 2019 (pre Covid), although they are down 41% from the stimmy days. Apparently times are so good that parents are shelling out $4,000 to get their daughters prepped to rush a sorority.

My final (printable) observation is the proliferation of tattoos. I do not have one and I have no problem with anyone having one. But how about bit of order and less randomness - are you new-school, tribal, or black and grey? Make a decision on a style or theme, then stick with it. The dolphin on your lower back is nice, but why follow it up with that lotus on your cheek? Any R-A-G-R-E-T-S [sic]?

Speaking of regrets, we talked earlier in the year about investors feeling regret if the markets moved forward as they sat in the safety of T-Bills. The chart entitled "record week of T-bill selling by BofA private clients" says they are in fact feeling regret. After selling stocks and piling in T-bills, many are now doing what many investors do. Wait for a confirmation, then move back into stocks. The problem is the initial part of a rally tends to be the steepest and best. As Pat Benatar sang, "It's a little too little, it's a little too late." Don't get me wrong, holding T-bills and bonds is a part of a well-balanced portfolio. But, trying to time when to get out of stocks and back in is a terrible idea. We kept your allocations and continued to rebalance during the pull back in 2022, and you are reaping the rewards.

The Fed seems to have pulled off "immaculate disinflation." They did raise rates recently to the highest level in 22 years. Chairman Powell stated that they no longer forecast a recession, and they are leaning toward putting further increases on pause. Meanwhile, the second quarter GDP increase was driven by robust spending by both consumers and businesses. July was a hot month on many fronts. But there is a yin to the yang. More American are getting turned down for loans as rejection rates are the highest since 2018. Student loans are set for repayment shortly and the leading economic indicators turned down.

For investors, don't be like BofA clients. Don't chase. We do not recommend selling assets unless they have become a large part of your net worth. All assets revert to the mean, as does everything in life. 2023 will see the return of the balanced portfolio. Owning stocks and bonds in this environment is appealing. We do not see that as gambling, but rather smart deployment of your capital. We look forward to talking with you and as always, we are here to answer your questions.

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DISCLOSURES: Past performance is not a guarantee of future results. Indices are not available for direct investment. Index performance does not reflect the expenses associated with the management of an actual portfolio. Inflation is typically defined as the change in the non-seasonally adjusted, all-items Consumer Price Index (CPI) for all urban consumers. CPI data are available from the US Bureau of Labor Statistics. Stock is the capital raised by a corporation through the issue of shares entitling holders to an ownership interest of the corporation. Treasury securities are negotiable debt issued by the United States Department of the Treasury. They are backed by the government's full faith and credit and are exempt from state and local taxes. Past performance is no guarantee of future results, and there is always the risk that an investor may lose money. Diversification neither assures a profit nor guarantees against loss in a declining market. The information contained herein is based on internal research derived from various sources and does not purport to be statements of all material facts relating to the securities mentioned. The information contained herein, while not guaranteed as to the accuracy or completeness, has been obtained from sources we believe to be reliable. Opinions expressed herein are subject to change without notice.