Q3 Investment Commentary, China, and Estate Planning

A&I Wealth Management > Blog > Q3 Investment Commentary, China, and Estate Planning

Hang in there!

The third quarter of 2021 saw equity markets rise and then fall. Looking ahead to the rest of 2021, as usual, we do not make any predictions. However, the fourth quarter is historically the strongest seasonal period for stocks. Since 1970, the median fourth quarter return for the MSCI World Index is 4.4%, and it has registered a positive return for the quarter more than 75% of the time.

Download the complete Third Quarter Investment Commentary.

Inflation is Not Yet a Problem

We clearly have inflation. And still, our researchers are not worried about it. The US economy has a lot of slack. A number of people are unemployed and these numbers have still not risen to the levels they were at prior to the pandemic. We would need a lot more employment to see a wage-price spiral that would cause higher inflation. So say our researchers, and we believe them. So I’ll leave it at that.

Why We Like Equities, Still

Equities hit all-time highs in the very near past. As we have said many times, this is due to TINA: There Is No Alternative. Bond yields are at or near all-time lows. Plus, we have had above average earnings growth, especially for the technology sector, and especially among the largest of the tech companies. Still, these trends are not likely to continue. As our researchers point out in the extended commentary, “mathematically and economically” this is impossible to repeat over the next five to ten years. The companies (investments) that did well over the previous five to ten years are not necessarily the same companies that will do well in the future.


The portion of our portfolios allocated to China has diminished in the recent past. In the complete investment commentary, you will read the strategic as well as short term thinking the researchers have about China. Recently, China has faced a threat with a huge company that did real estate development, called Evergrande. Just before that, China destroyed the private education companies by nationalizing the education process. Last year, of course, China stopped an IPO for a company called Ant Group. The leader of China is taking more forceful control of more areas of the country, and this increases the risk for investors like us.

In Summary

Trends that we identified a year ago are the same trends we see continuing. We will hold the majority of our assets in US companies, but a larger portion of these assets in smaller, more “value” than “growth” companies. Furthermore, we have a larger portion of our assets in emerging markets than usual. This is where our researchers see potential opportunity. Although each one of our strategists takes a different approach to how they manage our capital, in these ways we can see consensus. Many changes inside the funds have happened this year. Please contact your investment advisor if you would like to learn more.

For more information:

About the author

Karl Frank, Certified Financial Planner ®, MSF, MBA, MA, is the President of A&I Financial Services LLC, a local business that specializes in wealth management, insurance planning, and retirement planning. Karl cares for business owners and the businesses that care for them. Learn More about Karl.