Author Archives: Nvest Wealth Strategies

“The Upside to Rate Hikes” and SECURE Act 2.0

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As shared throughout 2022, the Fed’s battle with inflation is the dominant force driving challenges in both the stock and bond markets.  In addition to a challenging market, borrowers are feeling pain in the form of higher rates on mortgages, credit cards, auto loans, etc.  These are the painful realities of reversing the Fed’s previous interest rate (ie. free money) and quantitative easing (QE) policies.

There is an attractive positive to higher interest rates however.  For savers, cash is finally returning a “reasonable” rate… if you know where to look! Continue reading→

“Three-in-One” – November Market Commentary

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Three-In-One: This commentary shares three shorter writings about the changing investment landscape.  We hope presenting these ideas is helpful; we share our “radar screen” as we navigate these perplexing times. – Bill Henderly, CFA, Nvest Wealth Strategies, Inc.

Price & Time

October financial market performance is often thought to be scary.  That’s because some of the worst historical drawdowns occurred in October – 1929 and 1987.  Interestingly a number of past bear markets also “died” in October of which several were also midterm election years.  Did you know, that September is more often a negative experience?  October 2022 represents the single best performance month this year for stocks and client portfolios.  It provides at least momentary respite from an otherwise trying YTD.  The financial market system may be “voting” on several changing tidbits – inflation may be peak which some think should lead to a Federal Reserve pivot or pause (but that seems unlikely before 2023); company earnings are softer but better than expected; and upcoming mid-term elections may produce Washington gridlock, a condition markets generally prefer.  The S&P500 advanced +8.1% during the month which generated positive client portfolio returns as well.  YTD returns are still decidedly negative but improved from their quarter-end market lows.

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“A Fresh Pair of Eyes”, “Always Late”, and “Times They Are a Changing” – Nvest Nsights Q3 Newsletter

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We hope this note finds you and your family well and enjoying the beginning of Fall.  Unfortunately, “enjoyable” is not a word we’d presently associate with the financial markets.  The 3Q marked the first time since 1976 where both stocks and bonds were simultaneously negative 3 quarters in a row.  As we interact with clients, some jokingly request that we not send this quarter’s update as they are doing their best to not focus closely.  That may not be the worst strategy!

Our newsletter this quarter includes the following brief perspectives:

  • “A Fresh Pair of Eyes” – 2022 remains all about rates (interest & inflation), and the dynamics are very different than when the year began.
  • “Always Late” – What’s it like to always be late?  Maybe we should ask the Fed.  Recognizing that monetary policy always acts with a lag, it is understandable the market is concerned by the aggressive changes pursued over the last 9 months.  Will the Fed go too far before we see the impact of their actions?
  • “The Times They Are a Changing” – What’s the market saying about the future; what can help the markets stabilize and ultimately turn the negative trend around?
  • “Buckets of Time – Dead, or Alive?” – With bonds experiencing their worst stretch in over 40 years, some may be wondering if the “buckets of time” approach remains appropriate in today’s environment.

The printer-friendly version of the newsletter, including benchmarking and widely held fund performance data, can be obtained here: printer-friendly PDF version.

With so many issues affecting the current investment climate, we hope that these updates are helpful.  Please do not hesitate to call, email with questions, or to coordinate a time to visit together.

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Buckets of Time – Dead or Alive?

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Perhaps the most unsettling aspect about 2022 is not the degree to which the stock market is experiencing pain (not that unusual), but it’s the “double whammy” of also seeing meaningful depreciation in traditional safe fixed income. A recent headline, “The worst year in US history for the 60/40 portfolio”, underscores there being no place to hide in this bear market. During these challenging days, we continue to encourage maintaining a longer-term perspective. One way to do that is recalling “buckets of time” investing. Our well-seasoned clients may recall our “buckets of time” framework to unemotionally establish the investment objective (asset mix) for each account. This process helps align a client’s time horizon and purpose to investing the account.Continue reading→

Special Market Update – “Financial Market Elevators”

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On April 27 we shared a Special Market Alert entitled “Escalators, Not Elevators”.  Why does investing in the stock market, also add the bond market this year, feel like taking an escalator up, and riding an elevator down?  Rising markets seem to be slow upward climbs, like an escalator; the rise occurs over extended time (months and years).  But a correction or bear market, defined as a decline of -20% or more, occurs quickly (days and weeks, or months), like riding an elevator down.  It seems to take a year to earn 10% in a rising market, but a few days to lose 10%.  The elevator experience is always uncomfortable and creates anxiety.  Yes, anxiety for us too as we manage client accounts with great care and effort.

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Behind in the Count – September Commentary

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Challenges exist for anyone playing sports when they are “behind in the count.” It’s a common experience for all athletes. Pressure builds for example, when batting with a count of “no balls and two strikes”, or behind in the football score 21-0. No competitor likes being behind, and extra effort may be pursued to bring about a positive winning outcome. Competitors strive for opportunity to succeed. Isn’t that the way with most things in life – pursue success, not failure?!

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Navigating – August Commentary

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GPS (Global Positioning Systems) offers us so much information about our surroundings and position in our world.  On a recent vacation, we used the Navigate button in our Tesla to direct us efficiently to charging stations to help us reach our goal, home.  The system calculated, like an aeronautical map used in aviation, our route with points of interest, neighborhoods, and terrain.  It took a few moments as it planned our route to avoid heavy traffic, road construction, and other hazards attempting to ensure the car would have ample charge to reach the next point – charging stations and ultimately home.  As we set off, the little red chevron that represented our car began following the planned route inching from right to left across our screen traveling west, north-west.  The map was laid out in the standard position with North locked at the top.  Our little chevron traversed across the fixed screen.   I’m not fond of that traveling presentation.  So, I pressed an icon on the top of the screen and suddenly our little chevron was fixed in the center pointing up (forward) as the map turned and moved under it!  [Being simple minded, I prefer the chevron pointing the same direction as the car is traveling.]  Which way was north, south, east west?  Did I care?  Cities, roads, and the world revolved around me!  My real concern was that we were generally traveling west, north-west toward our goal, home.

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“GIGO”, “The World Changed”, and “Bills to Pay” – Nvest Nsights Q2 Newsletter

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We hope you are enjoying summer and sunshine.  Unfortunately, the financial markets remain stuck in a “storm”.  After the difficult first quarter, pain accelerated during the 2Q.  There was no place to hide; bonds and stocks together experienced a 2nd consecutive negative quarter each – a somewhat rare occasion.

Against this backdrop and with so many big worries without easy or quick resolution (inflation, Russia/Ukraine, Fed that is intentionally trying to slow the economy to balance supply & demand), it can become challenging to maintain a longer-term perspective.  Our newsletter this quarter provides the following context:

  • “GIGO” – Do your best to control the type of information you consume, as well as how you react to it.  What version of “GIGO” will you be?
  • “The World Changed” – A review of market action so far in 2022 and context from history providing clues to what might be expected from here.
  • “Bills to Pay” – The “cost” of fiscal and monetary stimulus pursued by governments around the globe in response to the Great Lockdown is being paid in 2022.  How is the bill being paid and how long will that last?
  • “iPod, iPhone, iPad… now the I Bond” – What are I Bonds, and are they for me?

A printer-friendly version of the newsletter, including benchmarking and fund performance data, can be obtained here: Q2 Nvest Nsights.

We realize how troubling is the current market environment and are here for you.  We continue to monitor the backdrop, and be intentional about managing portfolios tactically.  Please do not hesitate to call, email with questions, or to coordinate a time to visit together.

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iPod, iPhone, iPad… now the “I Bond”

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Similar to the steady stream of successful products developed by Apple, it seems the US government hit a homerun with the “I Bond”.  Although this US government savings instrument is not a new product, popularity is spiking (along with inflation) in 2022.  Through mid-June the government sold $14.4 billion of I Bonds, which is 40x more than was sold in all of 2020!  We are receiving a number of questions about “I Bonds”.  As interest rates and inflation increase in 2022, the headline attractiveness of this product is enhanced.

So what is a “Series I Savings Bond”?  What should investors know about this product?

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Special Market Update – “Market Sentiment = Inflation Stress”

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“Sentiment” means an attitude, thought, or judgment prompted by feeling; a refined feeling.

Late last week market sentiment quickly soured, like moving from spring to summer in just a few days; sentiment is very concerned about INFLATION and its influence on the future domestic and global economic path.  It’s not about economic strength – strong consumer spending, or company sales/earnings – it’s all about how the Fed and other global central bankers will be “attacking” stressful inflation.  2022 is the year of rates – inflation and interest rates (the Fed just raised rates another 0.75% – the biggest hike in a single move since 1994).  Inflation is creating demand destruction.  Inflation diverts where consumers would otherwise spend.  That growing concern is causing investors to rethink their attitude toward stocks and bonds.  After approaching these levels in late-May, the stock market officially entered a bear market down -20% on Monday (June 13) following  a short-lived bull market which ran just 22 months (from 3/23/2020 and ending on 1/3/2022).

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