Beacon Capital Management
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The Markets Monthly Review

Each of the benchmark indexes listed here posted positive monthly gains, led by the Russell 2000, which lapped the field after gaining over 5.0% for the month. The small-cap index is almost 17.0% ahead of its 2018 closing value. Signs that a trade accord with China may be in the offing helped stimulate investors to trade throughout February. Also, word from the Federal Reserve that it may not raise the target interest rate range as aggressively as proposed last year has had a positive impact on stocks. Corporate earnings season continued on a relatively positive trend, while energy stocks rebounded as oil production was curbed, sending gas prices at the pumps higher. Overall, following the Russell 2000, the Dow posted the next highest monthly gain ahead of the Nasdaq, S&P 500, and the Global Dow.

did you know?

December 2018 was an especially volatile month for investments, even for the normal choppiness of recent times, and the volatility finally got to investors as they fled to safety. Stocks and mutual funds were battered by the exits, but the markets were rocked by a rare occurrence as investors spurned bonds as well. When the dust had cleared, it was the worst December for stocks since the Great Depression. The following are key numbers from the month:

  • Actively managed funds experienced outflows of nearly $143 billion in December, their worst month ever
  • More than $46 billion exited U.S. stock mutual funds and ETFs in a single week (Dec. 10 – Dec 14)
  • Active bond funds suffered $44.3 billion in outflows while passive funds reeled in $60 billion

Sources: CNBC, Morningstar, Reuters

bright ideas
The Power of More Predictable Outcomes
How the Stop-Loss Trigger Worked for Beacon Clients

December 2018 was a volatile month. The wild market swings had investors antsy. At Beacon, we heard the panic from them: “Is this 2008 again?” “Are we going into a recession?” “Are the relations with China going to blow up?” “What’s going to happen with the government shutdown?” People were really getting spooked, and for good reason, because the markets were taking a beating. The only question was how bad it would be.

Finally, the market hit the stop-loss triggers we had in place, and we sold out on December 17. We placed the assets in conservative investments, all fixed income, and we watched the market drop for another week until it had its full flush out on Christmas Eve. And we weren’t alone in getting out. According to Morningstar, actively managed mutual funds experienced nearly $143 billion in outflows in their worst month on record.

A Smoother Ride

After we sold in December, the market dipped another 9.5 percent. If we use the hypothetical of a $100,000 investment in Vantage 2.0 Aggressive, the investment dropped to $98,740 and needed 1.28 percent to recover.

This compares to a $100,000 investment in Vanguard S&P 500, which hit a low of $90,453, requiring 10.55 percent needed to recover.

In all, we saved clients roughly 9.5 percent during the volatile month of December. We also helped saved them peace of mind.

Better Safe than Sorry

As it turned out, the December swoon turned out to be something of a false alarm. Instead of continuing to drop, the equities rebounded. And the markets received additional positive news as The Fed changed their stance on interest rates, helping with the quick recovery to the market.

Because we’re located in the Midwest, we often use the analogy of tornado alarms when describing our investment philosophy. When the tornado alarms go off, you go hunker down. You head to your basement and you wait. Most of the time, it turns out to be nothing. But if it turns out to be something, and your house is obliterated, you’re happy you listened to the warning signs and got to a place of safety.

The same can be said for our investment philosophy at Beacon—we’d rather be safe than sorry. Based on our research with our clients, they’re okay with not making everything the S&P 500 is because protection from losses is more important to them.

If you would like to learn more in-depth tools and strategies on how to communicate the Beacon philosophy of delivering more predictable outcomes to your clients, contact your wholesaler today!

*This information is a representation of how the model portfolio performed during the most recent Vantage 2.0 stop loss cycle. A stop-loss cycle is measured from the time equity positions were sold for fixed income until the time equities were repurchased. Please download Stop-Loss Analyzed for full disclosures.

beacon news

We made headlines last month for the sizeable impact that our buyback strategy had on the overall market, “Vanguard Bond ETF Loses $1.4 Billion as December Buyer Bails.”

Be sure to visit Beacon’s News & Press page for the latest credibility pieces to share with your clients and prospects, and follow Beacon on LinkedIn for the latest updates as they happen.


For Advisor Use Only, Not to Be Used With Clients

The GIPS Compliant Presentations for our Vantage portfolios can be obtained by clicking on the below link.  If you would like the Compliant Presentations to be emailed directly via PDF file or if you would like to receive a copy of Beacon’s Composite Descriptions; please respond to this email or contact Beacon at 937-439-9093.

BCM 2017 Compliant Presentations

Beacon Capital Management, Inc. is a registered investment adviser with the Securities and Exchange Commission. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Past performance is not indicative of future performance.

Additional information about Beacon Capital Management is also available on the SEC’s website at under CRD number 120641. Beacon Capital Management only transacts business in states where it is properly registered, notice filed, or excluded or exempted from registration or notice filing requirements.

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Beacon Capital Management

7777 Washington Village Drive, Suite 280, Dayton, OH 45459

P: 866.439.9093 | F: 937.424.4825