Monday Morning Market Insights: Last Week in Review with Rusty Vanneman, Vol. 17

Happy Monday. What a weekend. Spring is definitely here. Graduation parties, prom night, baseball games and lots of yard work. The Kentucky Derby. Also, for Omahans and Buffettheads, the first Saturday in May also typically means the annual Berkshire Hathaway shareholder meeting weekend. Though this year it took place in Los Angeles instead of in Omaha, 90-year old Warren Buffett and 97-year old Charlie Munger still took on questions and shared their wisdom for nearly 4 hours. What are we all going to do when they’re gone in 20 years or so? More on Warren Buffett and Berkshire Hathaway in a moment. 

Markets Update

Let’s first talk market numbers, and again, it’s a good story. The month of April was solid. The overall US stock market was up 5% for the month, and we witnessed multiple new all-time highs in various indices. Now up an impressive 12% for the year, it should be noted that the average stock is doing even better — up 18% for the year.   

Though the month of April was another positive gain, it was a bit of a reversal for market leadership. In the month of April, larger companies outperformed. So did Growth stocks. A leading reason for this change in leadership was that interest rates dropped last month. The 10-year Treasury yield, for instance, dropped from 1.74% to 1.65%. Interest rates seem to remain a key factor for explaining relative performance of late.  

Double digit gains after the first 4 months of the year is not uncommon for stocks. According to BeSpoke Investments, since 1928 this happens about 1 out of every 4 years. More importantly though, market history shows that even though we’re off to a nice start on the year, it doesn’t mean that the year’s gains will necessarily be front-loaded. According to BeSpoke Investments, when the market is up double digit after 4 months, the market has been higher 80% of the time for the remainder of the year. For a frame of reference, on a trailing 1-year basis, the market is up about 75% of the time. In other words, the odds don’t look bad for more market gains just because it had a hot start. 

 Another common concern is that some investors don’t like to buy new highs. I get it. Who doesn’t want to buy something on sale instead of at the highest price ever? But again the history suggests that this positive momentum tends to lead more gains in the months ahead. As seen in the quarterly OPS Reference Guide the market tends to produce above-average gains in the following year after new highs. 

Speaking of new highs, the S&P 500 has had 25 record closing highs this year. As a percentage of trading days, we have seen new highs 31% of all trading days so far this year. If this pace keeps up, this would be the best year for new highs ever, surpassing the prior best years in 1964 and 1995.

 As for the strong gains in April, it was driven by multiple factors. Of course we still have the major bullish factors of (1) the economy getting rapidly better and (2) massive liquidity in the system from fiscal/monetary support, but we also had a month of record setting corporate earnings updates.

Earnings Recap 

Corporate earnings season has been fabulous – and much better than expected. At this point, 86% companies are beating earnings expectations – that’s the highest percentage ever (to be fair, Factset has only been tracking beat rates since 2008). Last week saw incredible earnings reports from the “Fab Five” of Apple, Google, Facebook, Microsoft and Amazon. Yet, despite the crazy good numbers, the Feb Five was up only 2% on average last week. Hmmm. Looks like the fact that rates moved higher last week (from 1.58% to 1.65%) contributed to keeping big tech gains in check.

Taxes & Inflation

The news wasn’t necessarily all good last week though. Many investors are becoming increasingly concerned about taxes and inflation. Given that the ultimate investment goal is maintaining and growing inflation-adjusted, after-tax, wealth, these are always important considerations. 

When it comes to the higher proposed taxes, it’s early in the negotiations. It’s not likely that tax increases will be as high as initially proposed, but they are most likely moving higher. All else being equal, as Warren Buffett and Charlie Munger point, the increase in corporate taxes is a negative but it is what it is and they’ll adapt. Ultimately, they are not worried about potential tax hikes and point out, of course, that corporate taxes have typically been higher. 

As for higher inflation prints of late, is it “transitory “ as the Federal Reserve thinks, or something more ominous? There are smart, experienced, investment professionals who are on both sides of the argument. This is what makes markets. It should be noted, however, that the commodity market, which is positively correlated to inflation, has been on fire. Commodities were up 9% last month. They are now up 21% for the year and 65% for the last 12 months. Those are even better returns than the red-hot stock market over those time frames. 


Speaking of hot markets, are cryptocurrencies moving higher due to speculation, inflation concerns, increased institutional interest, or other factors? I would say yes to all of those reasons. Despite some more crazy volatility last month, Bitcoin basically ended the month at $58,000 after closing at approximately $59,000 last month. Sounds pretty quiet, right? Bitcoin also had a low price of $47,000 last month, after hitting a high price of $65,000. By the way, crypto is off to a hot start this week. Ether is at a new high past $3000.

The Week Ahead

In the week ahead, it will be another busy week for corporate earnings. It’s also the first Friday of the month, so we’ll get the latest monthly jobs report from the Labor Department. For the latter, the current expectation is a growth of nearly 1 million new workers being added to non-farm payrolls, but some economists are looking for well above that. The unemployment rate is expected to drop from 6.0%, to 5.7%.


Getting back to the Berkshire Hathaway meeting, Warren Buffett and Charlie Munger shared their thoughts on a variety of comments, including what I thought were three key take-aways: (1) investors should think long-term, be optimistic, and invest in diversified portfolios, (2) beware of the new speculative investments, including SPACs and the gamification of investing, and (3) the economy is “red-hot” and inflation is percolating. More on these takeaways in my upcoming monthly commentary. 

For more resources on the economy and markets, including Partner content, please review the Orion Portfolio Solutions Financial Advisor Success Hub.

As always, please let me know if you have any feedback or questions, by emailing If you have any questions on any strategy on the OPS platform, either how it should behave on a standalone basis or how it might blend with other strategies on OPS, please use

Have a great week!


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About Rusty Vanneman
Rusty Vanneman serves as the Chief Investment Strategist for Orion Advisor Solutions. An industry veteran with more than 30 years of investment experience, Rusty creates relevant market- and platform-related content that supports deeper, more engaging conversations with advisors and investors, educating key internal and external audiences on Orion Portfolio Solutions’ strategies and resources to help deliver favorable investor outcomes, and helps identify new investment offerings to meet growing marketplace demand. Rusty is a host of Orion’s The Weighing Machine podcast and authored the book “Higher Calling: A Guide to Helping Investors Achieve Their Goals.” Rusty has also managed multiple mutual funds and hedge funds during his career and was named one of the Top 10 Portfolio Managers to Watch by Money Management Executive in 2017. Prior to Orion’s acquisition of Brinker Capital in 2020, Rusty was the Chief Investment Officer for Orion Advisor Solutions and prior to that was the President and Chief Investment Officer of CLS Investments. Before joining Orion in 2012, Rusty served as the Chief Investment Officer and Managing Director for a multi-billion-dollar registered investment advisor (Kobren Insight Management) in the greater Boston area. His 11-year tenure at the RIA included a five-year span when the firm was owned by E*TRADE Financial where he also served as the Senior Market Strategist for E*TRADE Capital. Prior, Rusty was a Senior Analyst at Fidelity Management and Research (FMR Co) in Boston. Additional work experience includes Thomson Reuters, General Electric, and as a cattle ranch hand in the Nebraska Sand Hills. Rusty received his Bachelor of Science in Management from Babson College in Wellesley, Massachusetts, where he graduated with high distinction. He holds the Chartered Financial Analyst (CFA®) designation and is a member of the CFA Institute. He is also a Chartered Market Technician® (CMT) and is a member of the Market Technician’s Association (MTA).