All Things in Moderation

The First Quarter 2021 is off to a good start. Most people are eager to return to normal with travel, dining, and shopping this summer. Financial markets are no different.

We see similar pent-up yearnings in an array of analysts’ second-quarter financial forecasts. Check out these second-quarter forecast headlines:

A second coming? That last one shows the extent of optimism found in the current narrative diffusing through the global financial markets.

Now, think back to April 2020. A year ago, fear was tempting many investors to pile into safe-harbor holdings, even as most markets staged robust and surprising recoveries.

This year, we’re seeing many of those same investors chasing all kinds of hot holdings, as they now embrace an absence of fear. Consider these quarter-end headlines:

In its quarter-end recap, The Wall Street Journal summarized similar sentiments as follows:

“If there is a unifying theme to all this, it is that investors big and small showed no fear of risk-taking to start 2021. In fact, they embraced it.”

Sometimes, an extra shot of bravery is just what the doctor ordered. “No fear,” you might tell yourself as you enter your first marathon, launch a new business, or hug your college-bound child farewell. In investing, however, no fear can be as damaging as an excess dose of fear.

There are numerous proverbial sayings in every culture along the lines of “all things in moderation.” While taking things in moderation is often true in life, it’s true in investing too.

Moderation is vital to keep in mind given the investment environment we encounter today. The efficient market hypothesis proposes that asset prices are set by rational investors, whose primary concerns are systematic risk and expected returns. However, asset prices may now, more than normal, be fueled by investors’ desire to be part of a social movement, hopes to strike it rich, or plain old envy. While there are many reasons to own a stock, it helps to keep an accurate assessment of the potential risks and rewards involved in any given approach.

Staying the Course

We hope favorable markets continue, but investing is not a game of chance. If you were a client of ours last April, we were honored to be by your side to remind you that your disciplined investment strategy was in place. Your globally diversified portfolio is structured to help you maximize expected returns while minimizing the risks involved.

At the time, we encouraged you to stick to the plan. Today, we encourage you to do the same. Markets may run hot or cold. The scenery may be different. But your financial journey is still the same.


Past performance does not guarantee future results. All investments include risk and have the potential for loss as well as gain.

Data sources for returns and standard statistical data are provided by the sources referenced and are based on data obtained from recognized statistical services or other sources we believe to be reliable. However, some or all information has not been verified prior to the analysis, and we do not make any representations as to its accuracy or completeness. Any analysis nonfactual in nature constitutes only current opinions, which are subject to change. Benchmarks or indices are included for information purposes  only  to  reflect  the  current  market  environment;  no  index  is  a directly  tradable investment.  There  may  be  instances  when  consultant  opinions  regarding any fundamental or quantitative analysis do not agree.

The  commentary  contained  herein  has  been  compiled  by  W.  Reid Culp,  III  from  sources  provided  by  TAGStone  Capital,  as well  as  commentary  provided  by  Mr.  Culp,  personally,  and  information independently  obtained  by  Mr.  Culp.  The  pronoun  “we,”  as  used  herein,  references collectively the sources noted above.

TAGStone Capital, Inc. provides this update to convey general information about market conditions and not for the purpose of providing investment advice. Investment in any of the companies or sectors mentioned herein may not be appropriate for you. You should consult your advisor from TAGStone or others for investment advice regarding your own situation.