commentary

2023 Year-End U.S. Equity Letter from Haruki Toyama

The U.S. stock market had a good year in 2023. The S&P 500 Index recovered all of its 2022 decline, and slightly more, ending the year up 26.3%. The story of the year was the glaring concentration of returns in the Magnificent Seven, as the press has dubbed them. These seven megacap technology stocks returned an average of 111.7% for the year, accounting for well over half of the total return of the S&P 500.

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2023 Mid-Year U.S. Equity Letter from Haruki Toyama

We are halfway through 2023, and so far the U.S. stock market has continued its rebound from last year’s decline. The S&P 500 Index remains about 5% below its peak reached in January of 2022, so it hasn’t quite yet recovered all of its lost value, but as usual, the market averages don’t always tell the whole story.

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2022 Year-End U.S. Equity Letter from Haruki Toyama

The U.S. stock market suffered one of the worst annual losses in its history, with the S&P 500, Russell Midcap, and Russell 2000 declining -18.11, -17.32%, and -20.44%, respectively. Headlines point to many culprits, but higher interest rates dominate the conversation. We’ve had four decades of declining interest rates; it’s no coincidence that with rates rising sharply this past year, the S&P 500 Index had its third worst year in the past 40 years.

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When Investment Management Becomes a Partnership

For insurance companies, investment management does not reside in a vacuum. Each entity faces unique circumstances, and to obtain a favorable investing outcome, an insurance company must identify, understand, and manage all the risks involved. This is done through Enterprise Risk Management (ERM). The list of potential risks is long, and they are all interconnected.

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"Time in the market, not timing the market"

It's a timeless lesson that we're taught at an early age and that advisors preach to their clients regularly. The beauty of this simple lesson is that we have troves of data to show the impact of an equity investor staying fully invested. Specifically, the impact on your total return when you are not invested during the best-performing days and the stock market's sneaky history of recovering following major price declines.

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Inflation and Profitability in the New Economy

U.S. Equity Investor Letter for the Second Quarter of 2022 After hitting an all-time peak on the first trading day of 2022, it’s been all downhill for the S&P 500 index since. In fact, the 19.96% drop through the end of June is the worst first half of a calendar year for the index in over 50 years. Our equity strategies have generally remained true to form during this downturn, with both our flagship Large Cap and Mid Cap strategies losing less than their respective benchmarks in the year-to-date period, though that may be little consolation.

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Macroeconomic Update - April 2022

Investment Perspectives for Insurance Companies. At an industry conference last month, Madison Portfolio Manager Jeff Matthias shared the following macroeconomic update, including the firm’s thoughts on monetary policy, inflation and unemployment, household and business outlook, risk of stagflation and/or recession, and a general outlook for both the economic and credit cycles.

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Market Volatility is Back... With Few Places for Investors to Hide

Fixed Income Perspectives for the First Quarter of 2022 Financial markets experienced one of the most volatile periods in years during the first quarter of 2022, even when compared to the dramatic moves as the Covid-19 shutdown unfolded. Spanning equity, commodity, and bond markets, investors found few places to hide. However, after experiencing this rapid repricing, there are reasons to be optimistic going forward.

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