Iron Capital Insights

  • Iron Capital Insights
  • January 9, 2018
  • Chuck Osborne

New Year, New Market?

2018 is off to a fast start. We actually got tax reform to end 2017, and the University of Georgia Bulldogs made it to the National Championship game for college football. Is it any surprise that much of the nation is feeling like hell must have frozen over?

Well, Alabama took care of business and the temperatures are moderating once again. After all, we may celebrate new beginnings every January 1, but in reality, it is just another day. Of course one would not know it if she listens to the commercials for “Wealth Managers” or watches CNBC.

Every January we go through this ritual of wrapping up the previous year and then debating what new strategy we need for the upcoming year. But why? First of all, January 1 is not all that different from December 31. Secondly, if a change is needed then it is needed when it is needed, not at some random moment on the calendar.

Imagine what would have happened if Alabama’s coach, Nick Saban, had waited until next football season to change his quarterback and his game plan? UGA would be national champions. If a change is needed then it is needed now; if it is not, well then don’t fix what isn’t broken.

We have been doing this so long at Iron Capital and our clients are so loyal that I sometimes forget to remind folks what it is that makes us different. Wall Street celebrates milestones like the New Year because they are in a transaction business. They want investors to change strategies as often as possible because that means transactions, and transactions mean revenue. At Iron Capital we are in the relationship business and we make more money when your portfolio grows, not by more transactions.

The traditional financial adviser is trained as a salesperson. They spend their days servicing existing clients and prospecting for new ones. They do not spend their days reviewing every investment that their clients own and deciding if they are still appropriate. They look at the client’s portfolio when it is review time, and guess what: a change of some sort will be in order.

Will 2018 be different than 2017? There is no doubt it will; no two years are exactly alike. But, is January all that different from December? Not so much.

So what will 2018 bring in the market? In all likelihood it will be more of the same. The economy is moving ahead strongly, not just here but also globally. The stocks of international companies are still far behind their American counterparts in terms of returns, and that gap will likely continue to close. Small companies who cannot afford expensive lobbyists will likely benefit more from tax reform than large companies who benefited from loopholes. Interest rates should rise as the economy improves, but they remain low. In other words, the world did not chance substantively on January 1, and neither should your portfolio.

Nothing goes up in a straight line and it would not be surprising to see the market experience a mild correction. We would see that as an opportunity, not something to fear. If something changes then so will we, not next season but during this game. That is what makes us who we are.

2017 was a good year for our clients and 2018 is off to a great start. For all of our Alabama friends, Roll Tide, and for the rest of us, well it’s a new year!

Warm Regards,


Chuck Osborne, CFA
Managing Director