The Cypress Compass

Navigating your financial future can be time consuming – but it doesn’t have to be. Check out The Cypress Compass publication, produced by our team of industry thought leaders. This quarterly publication brings you important topics all-in-one place. Here you’ll find financial market trends to keep you informed.

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Fixed Income – The Compass – January 2024


The fixed income markets continue to be volatile, but at the intermediate to long end of the curve. While the Fed has hinted at lowering rates, the evidence of when and how much continues to be the major discussion. Late in 2023 the Fed issued their “dot plots” (the expected path for rates) and targeted some 3 cuts in 2024. There was a major disagreement as the market had forecasted 6 – 7 cuts. Three months into 2024, both seem to have been way off. The Fed has an expectation of 0-2 cuts now, while the markets are betting on 1-3 cuts. This uncertainty has added to confusion and volatility in all markets. Numbers across the economy have been mixed while inflation remains sticky around the 3% level and job growth remains persistent (unemployment rate remains below 4%). The short end of the curve will not begin to move until the Fed starts to cut but the benchmark 10-year US Treasury continues to move based on those expectations for future cuts and more importantly the reasons for the cuts or the impact on the economy. The 10-year US Treasury closed the quarter with a 4.26% yield. In the last couple of days, it has even pushed slightly higher, putting it at levels we have not seen since late 2023. Where we go from here will be based on both the Federal Reserve and the economy, and their impact on each other.

Equities – The Compass – January 2024


The equity markets started off at a positive pace to begin the year. The S&P 500 ended the quarter at an all-time high along with posting the best first quarter in some 5 years. The S&P 500 was up just over 10% for the quarter, while the Dow Jones Industrial Average and Nasdaq also participated, up 5.6% and 9.1%, respectively. Much like 2023 ended, the market’s gains were pushed by the excitement around artificial intelligence (“AI”) and the demand for stocks that had exposure to that industry. While those stocks associated with AI led the markets early on, there was some broadening out towards the end of the quarter. The Invesco S&P 500 Equal Weighted index participated also, outpacing the major indices for the month and up greater than 7% in the quarter.

As for earnings, the S&P 500 delivered 10.1% growth in 4Q23. This was driven by double digit growth by Communication Services, Consumer Discretionary, Utilities, and Technology. These growth numbers were dragged down by Health Care, Materials, and Energy. There was a significant spread between the top and bottom section of some 74%. Each reported negative earnings for the quarter. Revenues by comparison were up 3.7% for the most recent quarter. These numbers did not have the variance that

earnings had. There was only an 18% variance. Of the 11 major sectors, only 3 had negative results: Materials, Utilities, and Energy. The remaining sectors are reported at between 2.9% (Consumer Staples) and 7.9% (Technology). Source: LSEG S&P 500 Earnings Scorecard as of 3/28/24

Where do we go from here… The markets have all been positive not only since the beginning of the year, but also looking back to the lows posted in October. Prices have moved higher and while some stocks have gotten cheaper on a valuation basis, the major indices have not. Going forward, what are investors going to do? Will they continue to stay invested in those names that have outperformed, and do they continue to deliver based on expectations? Or is there broadening of the market participation that is sustainable? For either decision, what are investors willing to pay based upon interest rates and their direction? These seem like the same questions we have been asking for the last year plus. Will we get any answers or continue to climb those walls of worry?

The Compass – November 2023

“It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.” – Mark Twain

Over the past nine months we have heard many a pundit declare unequivocally that a certain set of events were going to come to pass. From recession calls to cuts in interest rates by the Federal Reserve; many of the prognostications from earlier this year have failed to materialize as the market yet again proved that it can be very humbling to those who believe they know for sure what events will come to pass.

Maybe as a result of all “the certainty” that was being proffered, the market has been somewhat manic in its behavior this year. Throughout all the tumult, we at Cypress Bank & Trust have remained firm in our approach towards risk management in our clients’ portfolios. We have continually sought out opportunities that offer compelling return prospects that fit our individual clients’ risk tolerance.

Read November 2023 Compass

A Memo to My Younger Self – Sascha Rizza, CFA, CFP

As I look back on my 30-year career in the investment business I think back to the many things that I have learned along the way and considered what advice I would like to give myself 30 years ago.  Avoiding the fantastical suggestions like put every penny I had in Apple stock in 1997 when it was $0.16 a share or betting on the New York Giants beating the undefeated New England Patriots in Super Bowl 42, I decided to offer some simple lessons that have served me well and I believe will continue to serve investors well into the future. 

So here is my version of the Magnificent Seven: 

  1. A slow dollar is better than a quick nickel or put another way getting rich slowly is infinitely better than going broke quickly.   

For whatever reason we treat investing like it is a sprint when in reality it is a long marathon.  Maybe as a result of the 24-hour financial news available to us or quite possibly some of the so called “advances” that we have made to investing over the last 30 years it appears that we have become rather short sighted in our investment approach.  I would recommend the opposite, as investors we should be less concerned about next earnings and more concerned about the longer-term prospects of the investments we allocate capital towards.  According to Albert Einstein, “Compound interest is the eighth wonder of the world.  He who understands it, earns it …he who doesn’t…pays it.”  

2. Good corporate management should be treasured, and bad corporate management should be avoided.  

The road to perdition is paved with bad corporate managers who have taken otherwise viable (and sometimes pristine) corporate institutions and destroyed untold amounts of shareholder wealth.  Many times, they have enriched themselves at the expense of their shareholders but when you happen upon truly good corporate management you should invest accordingly.  The challenging part is discerning the difference between good and bad managers since often times today’s media darlings are tomorrow’s villains and scoundrels.  A reasonable dose of cynicism might serve you well. 

3. Cash is always better than a check. 

There have been many pages written about the “next great thing” or how a company’s earnings will grow dramatically at some future date.  Remember that cash today is infinitely better than a check tomorrow.  As such earnings (or more specifically real cash flow) are of paramount importance when looking for potential investments.  Keep in mind that for every “next great thing” that does come to pass there are probably at least 10 times that amount that have been confined to the dustbin of history. 

4. Avoid the big loss. 

This is easier said than done.  You never want to hold or sell a position based purely on what you paid for it versus what the current value is.  In this way you will need to be able to discern when you should exit a position rather than increasing your position when the price action has gone against you.  Sound analysis will help you in these situations, but the best advice is probably from Mark Twain who said “It ain’t what you don’t know that gets you in trouble.  It’s what you know for sure that just ain’t so”.  So be skeptical of even your own analysis and assumptions. 

5. It is better to build a portfolio than trade a portfolio. 

Although this might seem like a very antiquated notion especially with the virtual elimination of trading costs compared to what they used to be, when I look at the Hall of Fame of Great Investors there are almost exclusively comprised of individuals who built portfolios over time as opposed to people who constantly traded positions without holding on for the long term.  Keep in mind that wealth is built over time not overnight. 

6. Valuations are a terrible timing device but are critically important in determining future returns. 

Unless you can make the same trade with the guy who sold Jack the magic beans that grew the into the beanstalk you would be well advised to evaluate the relative valuation of your potential investment.  This doesn’t mean that overvalued investments can’t become more overvalued but the probability of them returning to a more normal valuation is generally equal to that of undervalued investments returning to normal valuation.  As Benjamin Graham stated long ago “In the short run, the market is a voting machine but in the long run, it is a weighing machine”.  The forces of economic gravity are long and variable, but they are also immutable. 

7. Patience will be your greatest asset and the hardest one to acquire. 

Even if you master the first six steps that I have outlined patience is the most challenging aspect of investing.  Many times you will feel the need to act even though often times inaction will be the correct path.  You will need to allow time to pass so that the investment field that you have planted has a chance to grow.  To that end I would suggest the following advice from the wise philosopher Winnie the Pooh who said, “Sometimes I sits and thinks and sometimes I just sits”. 

Happy investing. 

Sascha Rizzo, CFA, CFP

Senior Portfolio Manager/Market Executive and Senior Vice President

*Trust and Portfolio Management services offered by Cypress Bank & Trust are not insured by the FDIC; are not deposits, are not guaranteed, and are subject to investment risks, including possible loss of the principal invested.

*This article was prepared by Sascha Rizzo. Opinions expressed in this article are the author’s own and do not reflect the view of Cypress Bank and Trust.

Positive Pay to Prevent Fraud

Fraud prevention is a top priority for businesses in today’s digital landscape. That’s why Cypress Bank & Trust is proud to offer an exceptional solution: Positive Pay. Our Positive Pay feature, available through our Digital Banking platform, empowers business users to set and manage controls, providing an added layer of protection against fraudulent activities.

With Positive Pay, you can rest easy knowing that both bank-entered and user-entered blocks or filters combine to create a central display and transaction reference point. This synchronization ensures that no matter who enters the data, it works together seamlessly to safeguard your valuable business accounts.

Managing filters on your accounts has never been easier. Simply navigate to the Positive Pay section within our Digital Banking menu, where you’ll find controls for both check positive pay and ACH positive pay. The Filters section allows you to conveniently view and manage enabled accounts, giving you full control over your transactions.

Within the Positive Pay controls, you can access detailed information about your accounts, including transactions and associated lists. Customize your experience by adding, editing, or removing email addresses for receiving notifications from our Positive Pay service.

Stay on top of your business transactions with ease. The Transactions section enables you to review exception items, while the Review History section displays your previous decisions made within our Digital platform. You’ll have a comprehensive overview of your activity at your fingertips.

And that’s not all! Our Lists feature allows you to establish an Allow List, Block List, or Watch List for your accounts. Transactions matching the Allow List are automatically processed, while those matching the Block List are rejected. Transactions on the Watch List trigger email notifications, ensuring you’re promptly alerted to any potential risks.

At Cypress, we understand the importance of protecting your business from financial fraud. That’s why we’ve implemented Positive Pay as an added value feature within our Digital Banking platform. With Positive Pay, you can proactively manage controls and safeguard your accounts against fraudulent activities.