Dear Client of Clear Harbor,
The market turmoil of recent days and weeks—not only the swift damage to equity valuations, but the uncharacteristic volatility in fixed income—bears out the risks I have articulated for some time about this extraordinary economic and monetary period. For many quarters, the U.S. Federal Reserve has been walking a high wire between taming inflation and keeping economic growth in positive territory. More recently, the war in Ukraine and new Covid lockdowns in China have violently jostled the central bank from both sides of that wire—along with the nerves of consumers, businesses and market participants.
Across Europe, politicians and policymakers are scrambling for alternatives to Russian sources of oil and natural gas. Some forecasts now call for harvests in Ukraine—historically a major breadbasket to the Continent—to drop by half. Nor are the impacts of these crises limited to Europe: they have directly increased food and energy costs and fed the acceleration of broader inflation readings worldwide.
The risk of a U.S. recession later this year or sometime in 2023 is more elevated than at the start of the year and increasing. In Q1, U.S. GDP declined for the first time since early in the pandemic, and global growth estimates are shrinking. There can be little doubt that ongoing market volatility could further unsettle the portfolios of investors in the weeks and months ahead.
Against this backdrop, I write to emphasize three things about our firm and our commitment to you. First, we remain vigilant in the face of rapidly evolving markets, balancing a relentless analysis of market technicals and economic fundamentals with the perspective that comes from having weathered dramatic cycles and transitions in market structure in the past. Second, we are as committed as ever to basic investment discipline, and actively resist the urge to make rash decisions in response to individual headlines. It is the patient investor—the one who accepts that “time in the market” is more important than “timing the market”—who is likeliest to achieve his or her goals over time.
Finally: clear communication is a hallmark of the Clear Harbor approach with clients. While we cannot influence what occurs in the markets, we can make every effort to ensure that your wealth road map reflects your current goals, risk tolerance, and expected liquidity needs. If recent changes in your financial life require our attention, please do not hesitate to schedule a call or meeting to discuss them.
These principles—vigilance, discipline, and communication—were our bywords as the world recovered from the 2007-08 financial crisis, the euro crisis, Brexit, the “taper tantrum,” and those disorienting first days of the Covid-19 pandemic. Each of these historic events was unique; all demanded a degree of humility in the face of sometimes profound market uncertainty.
Throughout, I have been grateful for your trust and confidence in the Clear Harbor team. Now as then, on behalf of the entire firm: I thank you for your partnership with us. We welcome any opportunity to discuss your specific concerns, the markets in general, and how to better align the two.
Clear Harbor Asset Management, LLC (“Clear Harbor”) is an SEC registered investment adviser with its principal place of business in the State of Connecticut. Clear Harbor and its representatives are in compliance with the current notice filing requirements imposed upon registered investment advisers by those states in which Clear Harbor maintains clients. Clear Harbor may only transact business in those states in which it is notice filed or qualifies for an exemption or exclusion from notice filing requirements.
The material contained herein is intended as a general market commentary. The commentary may contain general information and views that are not directly relevant to your account. Opinions expressed herein are those of Aaron Kennon and may differ from those of other employees and affiliates of Clear Harbor Asset Management LLC. The information contained herein should not be construed as personalized investment advice. Past performance is no guarantee of future results. Information presented herein is subject to change without notice and should not be considered as a solicitation to buy or sell any security. Any comparison to an index, including the S&P 500 and Russell 2000, is for comparative purposes only. An investment cannot be made directly into an index, which are unmanaged and do not reflect the deduction of advisory fees. This brochure is limited to the dissemination of general information pertaining to its investment advisory services. The current account composition is intended for informational purposes and allocations are subject to change.
For information pertaining to the registration status of Clear Harbor, please contact Clear Harbor or refer to the Investment Adviser Public Disclosure web site (www.adviserinfo.sec.gov). For additional information about Clear Harbor, including fees and services, send for our disclosure statement as set forth on Form ADV from Clear Harbor using the contact information herein. Please read the disclosure statement carefully before you invest or send money.