When to Pivot?







The first half of 2018 went well in terms of market performance and economic growth.

In fact, the second longest-running bull market in U.S. stock market history managed to weather a few bumps and bruises to climb even higher. That’s the good news. 1

The bad news are the expected near-term headwinds that could change the tide of performance, such as:2

  • Higher commodity costs
  • Threat of trade wars
  • Potential party leadership change in Congress
  • Political uncertainty in Europe, the Middle East, Asia and the U.S.

It’s a good time for investors to evaluate their portfolios to ensure they still align with asset allocation strategies. Is it possible your equity allocation is larger than originally intended? Is your portfolio tilted toward higher risk than your overall risk tolerance level? Are you closer to your financial goals than expected by this point?

Given the potential for market headwinds, you may want to address these questions with your financial advisor. If you’d like help assessing your current portfolio, please feel free to give us a call.

The idea of pivoting to a more conservative position may fly in the face of reason, particularly given the double-digit revenue growth companies have recently experienced, combined with favorable tax cuts from the new legislation. A Morgan Stanley analyst recommends exploring the fundamentals of specific holdings to better understand their resilience. To illustrate, an analysis of companies during the 2008 recession revealed that those boasting stronger margins significantly outperformed peers with manageable leverage both during the recession and after the market recovered.3

In the ETF market, managers expect increased volatility as well as a hike in interest rates once or twice by the year’s end. There’s a general sense that globally diversified portfolios may want to consider pivoting to more U.S.-based revenue sources as well as lower-volatility strategies and investments.4

Even as we consider a potential downturn, it’s still wise to pursue growth, pivoting toward
companies that use innovation to create new revenue streams. A recent survey of 1,440 C-level executives across 11 industry sectors and 12 countries found that while only 6 percent of companies have successfully penetrated new market opportunities, those that did earned at least 75 percent of their current revenues from these previously unexplored markets. While this may sound like a reference to higher-risk start-ups, it’s worth considering well-established players who have adapted new business strategies to pair stability and growth opportunities within a portfolio.5

Innovative companies also may sustain growth through market declines by pivoting workforce needs toward artificial intelligence (AI) automated technology. Experts recommend employers assess workforce requirements in terms of tasks, not jobs. Automating some tasks can help elevate the intellectual capital needed for other tasks. This could empower workers to make more meaningful contributions to drive growth while reducing the cost of menial tasks.6

If we can be of any assistance please give us a call at 801-990-5055.

Our firm assists retirees and pre-retirees in the creation of retirement strategies utilizing investment and insurance products. Advisory services offered through B.O.S.S. Retirement Advisors, a Registered Investment Advisory firm.. Insurance products and services offered through B.O.S.S. Retirement Solutions. Marketing materials provided by Infinity Marketing Services.

To see a list of services please visit us at bossretirement.com/services.

1 Bank of America U.S. Trust. June 19, 2018. “Mid-Year Outlook: Bright Spots, New Risks.” https://www.ustrust.com/articles/mid-year-outlook-bright-spots-new-risks.html. Accessed July 13, 2018.

2 Ibid.

3 Morgan Stanley. May 22, 2018. “The Financial Decision Maker’s Art of Learning to Pivot.” http://www.morganstanley.com/ideas/financial-decision-makers-learning-to-pivot?cid=ndbdmg-smsp-national-902. Accessed July 13, 2018.

4 Cinthia Murphy. ETF.com. July 13, 2018. “Mid-Year ETF Portfolio Positioning” http://www.etf.com/sections/features-and-news/mid-year-etf-portfolio-positioning?nopaging=1. Accessed July 13, 2018.

5 Business Wire. June 15, 2018. “Successful Companies Pivot to New Opportunities by Revitalizing – Not Neglecting – Their Core Businesses, Accenture Report Finds.” https://www.businesswire.com/news/home/20180615005048/en/Successful-Companies-Pivot-New-Opportunities-Revitalizing-–. Accessed July 12, 2018.

6 Business Insider. June 26, 2018. “CEOs Must Pivot their Workforces to Seize AI-driven Growth and Help Them Work with Intelligent Technologies, Accenture Report Finds.” http://markets.businessinsider.com/news/stocks/ceos-must-pivot-their-workforces-to-seize-ai-driven-growth-and-help-them-work-with-intelligent-technologies-accenture-report-finds-1027317128. Accessed July 13, 2018.

Ready to Take The Next Step?

For more information about any of the products and services listed here, schedule a meeting today or register to attend a seminar.

Or give us a call at 800.637.1031