Quarterly Client Letter – 4th Quarter 2020

If 2020 taught us anything, it is the folly and futility of trying to predict future events.  And, perhaps of equal importance, predicting how the world will react to those events.  Because even if a crystal ball had given us a glimpse of the COVID-19 pandemic, and the toll it would take in human lives, jobs, and economic devastation, there’s no way we would’ve predicted that both stocks and bonds, in the U.S. and abroad, would actually end the year higher.  And yet they did.  The fastest bear market in history turned out to be the shortest as well, as a full market cycle was compressed into less than a year.  

And as if to remind us that this folly and futility was not solely a 2020 phenomenon, the first week of 2021 has been marked by a perfect storm of political events that most any pundit would’ve warned would send stocks lower.  Yet, as of this writing, U.S. stocks, along with most other asset classes and geographies, sit at or near all-time highs. 

The smart money said if Biden won, stocks would drop.  But they didn’t.  Ostensibly because Republicans appeared to keep control of the Senate, and markets like gridlock.  As attention turned to the January 5 Georgia run-offs, the expectation was that if the Democrats took both seats, that would be bad for stocks.  Wrong again.  Even as we watched the horrifying events unfold at our nation’s Capitol on January 6, the stock market largely shrugged it off.  

So, how do we make intelligent investment decisions in a world where, by our own admission, future events are impossible to predict?

One of Warren Buffett’s frequent observations may hold the key to that answer – specifically, that investing is not an endeavor where the highest IQ wins, but rather, one that requires the right temperament.  And that temperament requires the rare ability to balance humility and self-confidence.  It requires, among other things, maintaining a focus on the longer-term rather than on short-term views or predictions.  It’s a temperament we seek in the investment managers we engage on your behalf.  We have no idea what stocks will do tomorrow, or next week, or next year.  But we know that odds are, over time, they will work their way higher.  

We are frequently asked our views on the market, and while it may sound like a canned answer, we tend to be short-term cautious and long-term optimistic.  Along these same lines, Bill Gates had the self-confidence to bet everything he had on Microsoft, but he also had the humility to keep a year’s worth of payroll in cash.  He believed in his long-term vision but knew anything could happen.  While saving like a pessimist, he invested like an optimist.  

So, what do we know?  And what do we think?  We know interest rates are very near historic lows.  We know that inflation remains low.  And we know that the Fed has adopted a policy stance that is very supportive of equities.  As a result of what we know, we think that stock valuations are elevated compared to historical norms, yet reasonable, if not compelling, compared to the returns available on cash or bonds.  We think the path of least resistance for stocks is higher.  And we think the biggest risks to financial assets are inflation and a weaker dollar, both the result of all the stimulus necessitated by the pandemic, and the subsequent increase in interest rates that might occur.  And while stock valuations would compress under such a scenario, neither bonds nor cash would provide much protection.  But non-dollar-denominated assets would.  So we continue to believe a healthy allocation to non-U.S. equities will serve us well, especially in an inflationary or weak dollar environment.  Within the U.S. equity markets, we think there are both pockets of value and pockets of excess.  And we believe indexed assets are skewed to the latter.  So we expect active, value-oriented stock-picking to finally enjoy some time in the sun after a long spell in the shadows.  All of which bodes well for how we position client assets.  



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Sissy Moreland

Client Services Trading

A graduate of Mississippi State University, Sissy joined Medley & Brown in 2017, but her career goes all the way back to 1990 when she was the merchandise director for four years at Phi Theta Kappa. She was also Customer Service Manager and Marketing Development Manager at Crystal Springs Apparel from 1994 to 2005. From 2005 to 2017, she was Manager of Sales Administration at Skyhawke Technologies. Thanks to her considerable operations and administrative experience, Sissy oversees trading and assists with most back-office operations for the firm. Staying so busy at work requires Sissy to recharge her batteries outside the office from time to time which she does by running, reading, enjoying a leisurely brunch, and watching the Saints play football.

Beth Braswell

Client Services Coordinator

Beth spent four years in the investment world before joining Medley & Brown in 2004 as our operations coordinator. She and her husband Robbie are busy parents to identical triplet daughters, so not surprisingly, some of Beth’s favorite things to do are napping and relaxing on the beach when she actually finds the time. Beth also enjoys taking short walks to the pool, attending concerts, and going out of town for long weekends. Beth loves her Mississippi State bulldogs and currently has four dogs, three cats, and three grandcats because having three children simply isn’t enough. No wonder her operational skills are so exceptional.

Doug Muenzenmay, CFA, CFP®

Senior Advisor   |   Principal

When he’s not enjoying the outdoors or attending his children’s school and sporting events, you can find Doug studiously researching investments for his clients. His career began in 1991 after graduating from the University of Iowa with a bachelor’s degree in economics. He spent 17 years in trust investments at three different banks before joining Medley & Brown in 2010. Doug also got his MBA from Mississippi College and served as an adjunct professor in finance there from 2007 to 2013. Married to his wife Sharon since 2001, Doug is a Chartered Financial Analyst (CFA), Certified Financial Planner (CFP), and a board member of the CFA Society of Mississippi.

Eddie Carlisle, CFP®

Senior Advisor  |   Principal  |  Chief Compliance Officer

Eddie’s extensive education includes a B.S.B.A. in accounting, with special distinction, from Mississippi College in 1994, along with a J.D. from Vanderbilt University and LL.M. (Master of Laws) in taxation from the University of Florida. But it’s what he’s learned outside of school and work that really stands out. He’s an Eagle Scout, which taught him a great deal about honesty and hard work from an early age. He learned even more earning black belts in Taekwondo, Hapkido, and Hanmudo. Oh, and he studies the Korean language in his spare time as well. Additionally, Eddie serves as an adult leader for Scout Troop 164 in Madison. He is a past board member of Hope Hollow Ministries, the Central Mississippi Down Syndrome Society, and the Mississippi Corporate Counsel Association. Eddie is currently a board member of the Woodward Hines Education Foundation. He enjoys spending time with his wife, Sarah, and their three children—Andrew, Caroline, and Emma. 

Julius Ridgway

Senior Advisor   |   Principal

Judging from his background, you’d think investments and other financial matters were all Julius cares about. After all, he has two decades of direct investment experience and spent the previous ten years involved in banking and real estate. Julius also received a masters degree from the London School of Economics in 1998, an MBA from Millsaps College in 1993, and a history degree from the University of Mississippi in 1990. But his true passions include driving sports cars on racetracks or twisty mountain roads, running ultramarathons, and taking road trips with his wife and son. He’s worked here since 2002 as a Chartered Financial Analyst (CFA) and member of the CFA Institute while also serving as an adjunct instructor at Millsaps College and board member of New Stage Theatre. It takes major dedication to tackle all these responsibilities—sort of like training for all those long distant runs—but Julius enjoys every minute of the grind. And when it’s time to slow down, Julius finds the best way to clear his head is taking long hikes in the mountains on all those road trips.