This month’s Newsletter is a summary of Haven Wealth Group’s response to a client question.  The question was twofold:

  • What were the determining factors that prompted us to make asset allocation changes during the 4th quarter 2018 downturn?
  • What strategies did we employ to make those changes?

This is a great subject to address since 4th quarter financial wounds are still fresh.

Three goals guiding our investment strategy during a market downturn are: preserve client capital, reduce risk and raise cash to take advantage of the next upturn. The charts below illustrate how the Aggressive, Moderate and Conservative risk groups’ asset allocations were reconfigured from 9/30/18 to 1/31/19.

Allocation History


Date Cash (%) Stocks (%) Bonds (%)
9/30/2018 3 88 9
10/31/2018 31 58 10
11/30/2018 30 60 9
12/31/2018 58 31 11
1/31/2019 3 85 12


Date Cash (%) Stocks (%) Bonds (%)
9/30/2018 3 85 13
10/31/2018 20 61 18
11/30/2018 23 59 19
12/31/2018 24 39 37
1/31/2019 4 57 39


Date Cash (%) Stocks (%) Bonds (%)
9/30/2018 3 64 33
10/31/2018 17 39 44
11/30/2018 10 44 46
12/31/2018 25 26 49
1/31/2019 4 46 50


In October, the Federal Reserve announced it would raise interest rates in December and continue to raise rates throughout 2019.  In the three weeks following this announcement the S&P 500 tumbled 11.5%.  During this time, Haven Wealth Group began to reduce equity positions and used the proceeds to purchase bonds and raise cash across all risk groups.

Throughout November, we held cash positions and monitored data for signs that the equity market was stabilizing.  Our analysis showed weak trading volume and no clear indication of an upward trend.

In December, the Federal Reserve increased interest rates.  Further, Chairman Powell reiterated the Fed’s intent to raise rates throughout 2019.  These two events drove the S&P 500 down an additional 10%.  The selling volume in the stock market remained strong through December 24th, what we now know was the low.

During January, equity markets rose on strong volume to a level that demonstrated a recovery from 4th quarter losses may be on firm footing.  As volumes rose we began to reenter the equity market.  By the end of January, each risk group was fully invested. Cash levels where brought back to September levels and bond allocations were increased in accordance with risk tolerance.

Haven Wealth Group was able to purchase short-to-intermediate term bonds with attractive yields during the months of October, November and December.  The Moderate and Conservative accounts purchased several bonds with maturities of less than 6 years, with yields ranging from 5.3% – 9%.  The Aggressive accounts locked in a 3-year bond with a yield of 9%.

Please contact Haven Wealth Group if you have any questions regarding asset allocation groups, risk tolerance, or which category is right for you.  As always, we appreciate any feedback from all of our clients.  Please let us know about any topics that you would like to see covered in future newsletters.

Thank you

Haven Wealth Group Team



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