Moore Financial Solutions First Quarter 2021
Tyler A. Moore • April 1, 2021
Q1 2021 is now in the rear-view mirror, and it left us with a lot to review. This quarter brought an unprecedented amount of “firsts”. This is the first full quarter of Moore Financial Solutions, and I am proud to bring personal management with a cutting-edge platform. I would like to continue to welcome you to Moore F.S. and thank you for choosing to do business with us. You remain my (and our) #1 priority, and I wish to make very clear that I am always able to be reached to discuss your account directly. We see life getting back to some level of normalcy in 2021 and a shift back to consistent face to face meetings. I have missed engaging with you in person, face to face. Four Q1 events will be detailed below.
First, Q1 hosted the one-year anniversary of the start of the pandemic. I consider the start of the pandemic when the Big 12 tournament cancelled games in early-mid March 2020. It was clear we were in unprecedented times regarding society, health, and your investments. Looking back over the past 12 months, we see recovery in equity prices, having moved from approximately 2,237.40 on the S & P 500 on 03/23/20 to 3,972.89 to end Q1, and ultimately falling one trading day short of hitting 4,000 on the S & P 500. Moore F.S. clients did a great job of having faith that equity prices would recover when things were very scary, and I personally thank you for that trust. I remember in March ’20 seeing empty store shelves, lock down orders, and the sight we all became very used to, masks! This was undoubtedly a scary sight, but a year later markets are recovering and are on solid footing.
Second, a Q1 interest rate rise is welcomed news to many investors holding investments that pay dividends. However, the long-term gain of interest rate rises comes with some short-term pain. In the first quarter of 2021, the U.S. 10-year treasury yield nearly doubled from approximately .93% to 1.73%. This increase brings rates back to a more normal level as the 10-year treasury historically has been over 4%. Fixed income and bond portfolios saw price pressure as interest rates rose, as they maintain an inverse relationship of price and yield. When yields go up, Moore F.S. will be able to purchase bonds for you that have higher yields. This is a great thing, but the bonds you already have in your portfolio will lose some price, because they are less competitive in yield to the newest bonds issued at higher yield. For example, a bond that was worth $100 may have decreased to $99 dollars on days interest rates sharply rose. Moore F.S. portfolio management strategy was to continue to hold high credit quality bonds with shorter durations. These short duration bonds did not experience as much negative price pressure as longer duration bonds. Q1 had roughly half a dozen trading days where equity markets were higher, but a rise in interest rates caused a balanced portfolio to be down overall for that day due to bonds’ repricing. Bonds now have a better entry point than they did to start the year, having already experienced the interest rate rises this quarter. We expect interest rates to continue to rise over the intermediate and long term.
Third, “stimulus package” became the talk in mid Q1 as rumors of a $1.9 trillion dollar emergency package drove the market higher. These payouts likely gave consumers a bit more confidence in what was a difficult time for many, and businesses were positively impacted with a jolt of sales. It is still to be determined, and a near term concern of Moore F.S., if these large jolts will spark inflation and to what degree. It goes without saying that the Q1 stimulus package will go down in history.
Last, GameStop. You definitely heard about this monumental market force that had never been seen until Q1 ’21. The number of calls I received questioning the movement was unprecedented. Ultimately, the GameStop movement had little impact on your portfolio and was a phenomenon few expected. As the pressure of many large hedge funds betting against GameStop mounted, the stock price was driven down. Collectively, investors began to drive the price higher by betting in favor of GameStop and buying the shares. As the price began to rise, those betting against GameStop had to purchase the shares to undo their previous short. These dual forces along with momentum traders jumping on board drove the stock upward significantly. Moore F.S. client accounts did not include ownership of GameStop before or at any point during this phenomenon and we remain committed to owning equities of higher current earning companies, generally speaking.
Looking forward, we believe equities will maintain a path to higher levels in Q2. Of course, it is hard to make assumptions in a limited term such as three months. But we believe the American consumer will continue to live their life as if they now have the freedom to leave their houses after a year and will get out and spend money. Optimistically, we see the Federal Reserve keeping a close eye on inflation and continuing to near their 2% goal. A stronger dollar of recent weeks might act as a tailwind for consumers, while inflation has the opposite effect. An infrastructure bill will likely inject more money into the system, and Moore F.S. plans to increase allocation to areas that may be positively impacted. Moore F.S. looks to add holdings of PAVE, a U.S. infrastructure development ETF, to client accounts when appropriate in Q2, as well as small weightings to Columbus McKinnon Corp. (CMCO) and Builders First Source Inc. (BLDR). We plan to continue to hold recovery names such as Carnival Cruise Lines and Red Robin Gourmet Burger through Q2, when appropriate for clients. We see corporate tax rates heading higher and inflation ultimately pressuring companies in Q2. We see the second quarter
of 2021 being less eventful than the first but remain maneuverable within our investment philosophy. Together we make a great team and aim to accomplish your goals.
Tyler A. Moore
913-731-9105
TMooreFinancialSolutions.com
This material has been prepared for information and educational purposes and should not be construed as a solicitation for the purchase or sell of any investment. The content is developed from sources believed to be reliable. This information is not intended to be investment, legal or tax advice. Investing involves risk, including the loss of principal. No investment strategy can guarantee a profit or protect against loss in a period of declining values. Investment advisory services offered by duly registered individuals on behalf of ChangePath, LLC a Registered Investment Adviser. ChangePath, LLC and Moore Financial Solutions are unaffiliated entities.
The investment tree you planted previously may have provided more fruit in the second quarter of 2026 with the S&P 500 rising by about 15% (1). Additionally, some small cap funds such as ticker IJR (iShares Core S&P Small-Cap ETF) rose by about 19.3%, as investors felt relieved that interest rates were decreasing (2). This small cap surge was welcomed by portfolio managers such as Moore Financial Solutions, who have closely monitored the historical outperformance of small cap companies, which lagged last year. In Q2 all eyes focused on the U.S./Iran War, as investors pushed WTI crude oil prices to $112.95 on April 6th, 2026, an increase of 104% in 112 days from the December 15th, 2025, low. Investors viewed rising oil prices as a signal of higher inflation and worried that newly appointed Federal Reserve Chair Kevin Warsh might delay the interest rate cuts that many investors expected. Take five minutes every quarter, twenty minutes total for all of 2026, to better understand from my point of view why I believe the stock market is in an uptrend, the movement of other asset classes, and our thoughts of if this can continue. If a traveler arrived near Kansas City for a World Cup match, knew nothing about Moore F.S. and was curiously asking about firm values, or A.I. was tasked with doing analysis of Moore F.S. quarterly reviews, you would hear a common theme. Repetitively, we attempt to instill three thoughts regarding today's modern investor. First, stocks will move both up and down, so do not get used to 25% years, but be ready to use them to your advantage. Secondly, whether you are an individual client or Moore Financial Solutions managing $27.8 million, we are still a small fish in an enormous ocean of investors. That reality is one reason we avoid trying to time the market or become overly concerned with short-term movements. The intention is not to make either party feel small, rather create a metaphor that you are subject to the tide going up or down and remind you that it will do both. Lastly, this is not Mayberry where Wally's Filling Station, Floyd's Barbershop, and Mayberry Diner represent most of your commerce. In fact, you are likely tied deeply into a global economy with dozens of moving parts from tariff rules to the Strait of Hormuz. We will dive deeper into that strait and use West Texas Intermediate prices for our conversation. Last quarter we honed in on the logistics of the Strait of Hormuz stating, “That roughly 21-mile-wide body of water, the Strait of Hormuz, realistically can create a recession.” In other words, the economy is increasingly global, and a small shipping route over 7,500 miles from Kansas City impacts your prices for gas and thousands of other items. Moore F.S. took the opinion that the oil price spike would be short lived and spoke freely to clients about this view. We did not take this viewpoint on a hunch, rather we studied the backwardation of WTI crude oil prices. This unique backwardation of oil prices looked similar to the inverted yield curve our firm witnessed for a couple of years from 2022-2024 (you can learn more about yield curve inversion in the previous Moore F.S. reviews written Q3 2024 and Q3 2025). In our backwardation forecasting we did not feel obligated to predict the price of oil, rather we used crude oil futures markets to determine where traders were imagining oil prices. This reassuring feeling of a decrease in oil prices combined extremely well with our buy and hold philosophy. In other words, we did not panic sell stocks in fear that oil might hit $200/barrel, as multiple firms said was possible. Since 1985, the crude oil market has been in contango (a positively sloping price curve) around 42% of the time. It has been in backwardation 58% of the time as measured by the price difference between the front-month contract and contracts for six months in the future (4). Higher fuel prices fueled inflation concerns. As a result of an increasing oil price economy, traders drove interest rates higher as well. An economy that imagined a couple rate decreases for the year now was eyeing a spike in inflation and had to reposition interest rates. As a result, Wall Street pushed the 10-Year U.S. Treasury rate from 4.318% to 4.469% in Q2. Though we aim to avoid interest rate prognostications, we firmly believe the United States will rejoin a decreasing interest rate environment for the remainder of the year, at least from the 4.469% levels, barring geopolitical shocks to the system.
The past 35 days have humbled investors as we witnessed the S&P 500 lose approximately 6% from February 25th into the quarter's close. The S&P 500 finished the entire quarter 4.6% lower, which represents the first losing quarter since Q1 of last year, in which the S&P 500 lost about 4.59%. Much like an emotional play or movie, the market offered three scenes of varying benefit to investor portfolios. Scene one was brief but fruitful. In these first 12 days of the year the S&P 500 rose about 1.92%. Scene two left investors leaning on the emotional lessons learned from 2025's market downturn, with the S&P 500 moving about 9% lower from day 13 of the year until March 30th. Scene three flashed quickly and only represented one day. On this last day of the quarter, the S&P 500 meaningfully rose about 2.9% in an effort to heal a portion of the quarter's losses. I believe, based upon my nearly 14 years of money management, that stock market history doesn't repeat itself, but it does rhyme. Though I'm not predicting a positive year for the S&P 500 (and admittedly not in the business of making such predictions) this year's chart for the broad stock market looks somewhat like last year's. Those first quarter '25 stumbles were later looked at as a massive buying opportunity, symbolizing the power of "buy and hold" as it relates to stocks. Only time will tell if these stock market worries are warranted and if there will be continued damage to stock portfolios because of the conflict in Iran. Additionally, the market is eyeing oil price increases, interest rate increases, various geopolitical risks, and the additional unforeseen risks on the horizon. Or are stock market investors currently pricing in many areas of worry, all of which will subside in the coming weeks? Dive into the quarter's review in which I attempt to illustrate investing through my eyes, discuss quarterly geopolitical events, and speak to market moving factors of Q1 and investor emotions as a result. Use this tool to educate yourself and reduce worry or fear as it relates to investing.
