The state the economy is in will become clearer in the next few weeks, as corporations make their next earnings reports, according to Dave Grecsek, managing director of investment strategy and research at wealth management firm Aspiriant.
The economy and the markets are roiling from a series of headwinds and tailwinds during the first half of the year that has put everyone in uncertain territory for the transition to the third quarter, he said. “This week will kick off earnings season (when corporations report their second quarter earnings), which will be pivotal and will clarify things,” Grecsek said in an interview.
There are a lot of events happening right now between the economic impact of inflation and the Federal Reserve Board raising rates, and global events that have created challenges for the economy, but it has also created some opportunities for investors, Grecsek said.
“We are not making too many changes to our investment strategies” as these forces play out, he added, “because we are already where we want to be. Any shift that Aspiriant would make would be a move to more high quality firms for both equities and fixed income.”
Los Angeles-based Aspiriant is making some moves to larger, multinational corporate investments.
“When the markets reprice, as they did during the first half of this year, it creates a chance for investors to buy better companies at cheaper prices,” Grecsek said.
For the long-term, over the next decade or more, the global and domestic economies are in good shape, but for the next year to year-and-a-half, the picture may not be as good, the strategist said. “Immediately, we are still looking at the GDP being positive, but the next 18 months may be more challenging” with a recession possibly bringing the markets down 10% to 15%.
To combat the challenges, Grecsek said strategic policy for the firm has not changed from wide diversification over all markets. “We still are optimistic for equities over decade but next year or two could be challenging,” he said.
Aspiriant is positioning portfolios offensively and defensively to manage both headwinds and tailwinds within the market right now, he said. Offensively, Grecsek said Aspiriant is looking at value companies, and defensively it is looking at high-quality multinational companies to protect from volatility. Investors can still find opportunities in the market by focusing on long-term investments instead of panic selling, he added.