April 2022 | Issue 4

Hot Topics Worth

Sixty-ish Seconds

of Your Time

The yield curve inverting.

Portfolio health check.

Success and happiness.

Black & White cookies.

Two original articles below. Read on!

In Rough Waters, Redistribute Your Weight – Don’t Abandon Ship

You may have heard that on April 1st of this year, the yield curve inverted, and that an inevitable recession is coming. This, however, is only one part of a much bigger financial picture. 

When the yield curve inverts, most often what is being referenced is the 2-year treasury yield having surpassed the 10-year treasury yield. But not all yield curves have inverted. When you look at the spread between 10-year / 2-year treasuries in orange below vs. 10-year / 3-month treasuries in blue below, you’ll see a very different story. Where the blue is inverted at -0.0017, the orange is +1.851.*


*For more background information on the yield curve, check out this article: 

What Is the Yield Curve? How It's Used as a Market Indicator | SoFi

Will a recession happen? Most likely, yes. But when? We don’t know. How you react today will determine how you fair in the future. Remember, the markets are cyclical, and investors tend to be reactionary which is counter-intuitive, causing them to get greedy and buy when markets are strong and then get scared and sell when markets are weak. This is the opposite of the buy low, sell high mantra we all know.

Economic Cycle.jpg

If the yield curve inverting is a predictor of a future recession in approximately 24 months, give or take, then it is also a predictor of market growth as displayed by the average and median growth of the S&P over the course of a year following past inversions.**

**To take a deeper dive into how markets perform following an inversion, check out this article from Bloomberg.

In a World Full of Risk, Stocks Look Like the Least-Bad Option

When acting during times of volatility, like we are in now, it is important to consider a few things that are deeper than solely the performance of your holdings. 

You may want to ... 

  • Analyze how diverse your portfolio truly is and make sure the funds you own contain a wide enough breadth of companies.

  • Revisit your risk tolerance or consider a shift to more defensive positions.

  • Review your fixed income holdings and recalibrate them or use this opportunity to bolster some of your bond holdings while prices are low.
  • Understand the expense ratios and fees you are paying.
  • Identify the income your portfolio is generating and if it is offsetting those fees and helping to minimize any losses you may be experiencing.

According to the business cycle, a future expansion is just as likely as a future recession. Thoughtful maneuvering through these choppy waters, tends to be much more prudent than jumping overboard and abandoning all reason and data.

Why Black and White Cookies Are So Delicious

Anyone who lives in, has visited, or frequents New York City knows that there is something extraordinary about a black and white cookie. Also known as half-moons, if you’re upstate, or harlequins in the Midwest, they are more than a cookie. They are a fluffy, just-sweet-enough cake covered in thick, decadent fondant (half chocolate, half vanilla) instead of frosting, so that they can be wrapped in cling-wrap and travel well… not that they make it very far. In addition to the smooth richness of the fondant balanced by the fluffy spring of the cake, the thing that makes a black and white cookie so delicious, is it’s allure. They represent something we want to be a part of… a tradition, a history we want to live in for a moment, even though the world has changed.


The same is true of the traditions and ideals we hold for ourselves when it comes to success and achievement. In our culture we have learned that ‘winning at life’ looks a very specific way, both socially and economically. We see our clothes, our cars, our homes, the restaurants we eat at, the schools our children attend, our titles, our designations, our account balances as status symbols that display our level of success.


I was saying to my colleague, Jodi Carter of Financial Insight Training the other day, that when it comes to money, so many of us see things as one of two ways: success or failure. It’s either black or white. Which made me crave a black and white cookie then and there, of course, but also made me think a bit deeper about what that means, and her response (similar to this Instagram post) inspired me to write this piece. 


What are black and white cookies? When you look at the recipe, it’s everything you would expect. Flour, baking soda, baking powder, salt, milk, eggs, vanilla extract, butter, lemon zest, etc. The ingredients are standard, but the result is a dream, made even more so by the stories we tell ourselves about it. We may want something that looks delicious, like owning a multi-million-dollar home or a vacation property or the newest electric vehicle. But will owning that home or car truly fulfil our desire? Maybe we are just looking for a taste, not the whole cookie. My point is that it’s not all or nothing. It’s not someone else’s American Dream or bust. There is more than just the black or white decision. There is more than just I can or can’t afford the thing I think I want so badly.


When facing these larger life decisions, all of which are financial, I love to ask, “What is the third option? What is the version of this that you might not be considering?” Identify the ingredients, then weigh the data, and make a decision that satisfies both the dream you want to live out, and the reality of when and how you can achieve it.


When deciding on something like when to buy a home, or how much home to buy, begin with figuring out where you’d like to live, what you'd like the home to have, and what is most important to you about it. When purchasing a car, determining what school your child will attend, or deciding on any major purchase, ask yourself similar questions and then align what you uncover with your time horizon and finances. Rarely is it all or nothing. Often, the result is somewhere in the middle… one might even call it, the sweet spot.

I was also inspired by these articles below if you’d like to take a deeper dive into some observations about first time home buying, the math on Millennials, and the American Dream.

American Dream.jpg

American Dream.

A Millennial’s Reality is Not the American Dream


These Charts Show Why Most Millennials Couldn’t Buy Homes at 24 – Bloomberg


How to Afford a Down Payment on Your First Home | SoFi 


Michael Raimondi (He/Him)

Financial Planning | Investments | Insurance

Clarus Group, LLC

Office: 201.633.5737

Mobile: 646.872.1288


Clarus Group LLC ("Clarus Group") is a Registered Investment Advisor ("RIA"), with the U.S. Securities and Exchange Commission (“SEC”). Michael Raimondi provides investment advisory and related services through Clarus Group for clients in the State of New York and other states. Michael Raimondi and Clarus Group are not affiliated with the firms in which links were provided above.