Like many Americans over the last few years, I have found myself fascinated by the sport of Formula 1 racing. For those unfamiliar with it, Formula 1 is open-wheel racing that takes place all over the world and exists at a fascinating intersection between engineering, driving talent, teamwork, and race strategy. One unique aspect of watching these races is some teams have cars that are vastly superior to others, while other teams have cars that are more middle-tier, and then you have some teams that are just trying to not come in last. In each tier, you may have two or three teams who are really only competing against each other and for most of the field, the idea of actually winning the race is far out of reach unless something bizarre were to happen. While watching a race you often see first-tier teams pull up behind a second or third-tier team. after a pit stop At that point, the slower driver has a choice to make, they can try to keep the faster driver behind them, using up their tires and fuel in what will likely be a fruitless and potentially dangerous effort, or they can conserve their resources and let the faster car pass. Almost inevitability they choose the latter, and the commentator says something along the lines of, “Jones let Smith pass because they know they are not racing them.” In the investing world, it is easy to get caught up and focused on the big high-flying stocks, the names we hear at cocktail parties, or what our friend’s brother-in-law has made a killing on. It is important to remember that’s not who we are “racing” against. Instead, our true race is against time, inflation, and loss - all of which are harder to come back from. While we want to have some exposure to those “hard-chargers”, it is good to remember that focusing solely on them will put our portfolios in danger of a possible crash.  This is important right now as we see an equity market that is very focused on just a few names.

Looking beyond the equity markets and to the overall economy, we continue to see an economy that is slowing due to high interest rates and the continuation of the economic cycle. One significant exception is that employment has stayed very strong and there are still many open jobs out there. We think this will continue until we see some sort of shock to the economy either from continued banking issues (perhaps from the commercial property sector) or some other external shock from politics or geopolitics.

Speaking of politics, we are rapidly coming up on another presidential election year. Historically, election years are typically positive. Before we get there though, we may see a government shutdown sometime in the fall as political posturing intensifies before the election. Internationally, we don’t see a lot of changes as the conflict in the Ukraine continues, despite some recent fireworks within Russia itself and the trend of de-globalization continues its march forward.

For our clients, we continue to focus on your long-term goals and how to best reach them. If you’ve had any changes or would like to discuss your risk levels, please reach out and we look forward to meeting with you soon. As always, thank you for your continued faith and trust.

Kevin P. Sullivan, CFA, CFP®, AIF

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Sullivan & Associates is not a registered broker/dealer and is independent of Raymond James Financial Services. Investment advisory services are offered through Raymond James Financial Services Advisors, Inc., and Sullivan & Associates.

The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Kevin Sullivan and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Investing involves risk and you may incur a profit or loss regardless of the strategy selected.

Every investor's situation is unique, and you should consider your investment goals, risk tolerance, and time horizon before making any investment. Prior to making an investment decision, please consult with your financial advisor about your individual situation.

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