“September Crazy” & “Big FAT Yields” – Nvest Nsights Q3 Newsletter

Despite persistent and worrisome headlines dominating the news flow all year, US Stocks enter the 4th quarter with their biggest YTD gains in more than two decades.  In this quarter’s update, the article “September Crazy” discusses why the current bull market – which began 127 months ago and is now the longest in US history – could still advance further due to fundamentals and an anything-but-euphoric sentiment.  “Big Fat Yields” (or the lack-thereof) shares several implications of low interest rates, the message from the yield curve, and the Fed’s likelihood to pursue additional cuts.  The above themed titles taken together might also be a reason why the market leadership shifted abruptly in September; will we see the rotation wherein “Losers Win; Winners Lose” continue into the 4Q?

The newsletter also contains two brief Personal Finance themed notes: “Doing Diligence” and “Transitioning from a ‘Saver’ to a ‘Spender’ in Retirement” are related, but speak to the importance of discipline (be it with saving, investing, etc) as well as the emotional hurdles we observe for many individuals either at the doorsteps or in the early innings of retirement.  These articles can be found posted separately.

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Transitioning From A “Saver” to a “Spender” In Retirement

I  carefully saved for most of my life… now you are telling me that I need to spend my retirement nest egg?

One of the most difficult transitions many individuals will face in financial life is moving from being a “person at work” (the accumulation phase where you are saving and building wealth) into  someone now living off their “money at work” (the “decumulation” phase).  A recent study by BlackRock Retirement Institute found that “instead of actively and systematically decumulating assets, retirees display a tendency across all wealth levels to retain assets and not spend down their initial principal.” The study also found that, “More than one third of current retirees actually grew their assets – leaving considerable potential consumption on the table.”

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“Can’t Live There” – Nvest Nsights Q2 Newsletter Articles & FAQs

As we enter the 2nd half of 2019 it is difficult to recall a time when the market was hitting new highs but investor attitudes felt so indifferent.  Rather, sentiment is guarded.  This is likely due to a Federal Reserve that raised interest rates 4 times in 2018 and now appears to be “too tight” when also considering persistent uncertainty from international trade and tariff talk.  Taken together, investors perceive the global economic outlook is at risk.

As this quarter’s Nvest Nsights newsletter highlights, the good news is those worries seem to be keeping the close attention of those with the power to resolve.   “Can’t Live There” and “Missing – Reward” are efficient reads on the key items driving financial markets and context about the current (and now longest) economic expansion in US history.  Strong starts to a year bode well for the balance, but we also submit that the path of both the market and policy (trade & monetary) adjustments may not be smooth.  We also share several “Frequently Asked Questions” being received recently from clients; we hope you find those relevant and helpful.

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Life Insurance is NOT for Saving

Careful! Avoid buying life insurance as a savings strategy!  Stop buying it as a tax-deferral vehicle for retirement savings!

Insurance of any kind is a risk-management tool.  From our perspective, an individual should buy life insurance for one reason: because there will be a financial impact on one’s family or business if they unexpectedly die.  For most individuals, that financial impact is typically highest early in life when working years ahead are many, financial assets accumulated are low, and financially dependent children and/or significant debts (such as home mortgage) exist.  Over time, one’s insurance need generally declines and ultimately reduces to zero at some point prior to retirement.

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“Age is Just a Number” – Nvest Nsights Q1 Newsletter Articles

The 1st quarter was one of the strongest starts to a new year in the last two decades.  It followed an equally unsettling period over the final 3 months of 2018 which significantly damaged investor sentiment, making the swift rebound another textbook example revealing just how challenging would be market timing.   This quarter’s newsletter contains four brief articles.  “Reflections on a Bull Market” and “Age is Just a Number” provide perspective on the progress of the current bull market  and economic cycle, respectively, which are both long by historical standards but need not die due to age alone.  “No Beauty Contest” shares why the treasury yield curve is an indicator investors are monitoring closely, especially now, while “Style Differences Exist” provides color about how we are positioning client accounts with consideration for managing portfolio risk.

The full printer-friendly version of our newsletter, including data tables for selected mutual fund and ETF performance as well as portfolio benchmarking, can be downloaded here: NVEST NSIGHTS 1Q.

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“Confused? Understandable”; “Shilly-Shally Prone”; and “Working With Rock Stars” – Nvest Nsights Q4 Newsletter

Below, we submit our latest quarterly installment of Nvest Nsights.  The first article reviews how chaotic, volatile, and disappointing was the market’s performance during 2018.  But more important from our perspective is how swift selloffs like witnessed during the 4Q can cause one to suddenly feel confused and uncertain about the future; in these times it is most critical to step back and consider facts and fundamentals to avoid short-term action based on emotion.  The article “Shilly-Shally Prone” reminds how long-term investment success accrues to those who remain steadfast to a repeatable and disciplined process.  There are two remarkably similar historical backdrops which suggest it is very possible that present-day concerns could resolve or fade quickly against a still-sound economy, providing swift relief to recent market volatility here in 2019.  Finally, “We Work With Rock Stars” provides insight into our investment selection philosophy with rationale motivating several portfolio adjustments being executed over recent weeks and as we enter the New Year.

The full printer-friendly version of our newsletter, including data tables for selected mutual fund and ETF performance as well as portfolio benchmarking, can be downloaded here: NVEST NSIGHTS 4Q.

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Plan for a High Definition Life

According to a recent study, 90% of Americans will spend more time planning for vacation than they spend planning for retirement.   Similarly, we often observe firsthand how many do not truly know where their money is spent; and they do not devote time to gain more clarity about it.  Life becomes a foggy trip without rich meaning.

No one purposely sets out to have an undefined financial life… it just happens to us as we become a part of the culture in which we live.  It’s human nature which spans all of time; we repeat actions generation after generation.  One of the wisest men to ever live, Solomon, offers sage points in the Bible’s Ecclesiastes which can be simplified to these thoughts:

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“A Great Story Never Told” & “Flying on One Engine” – Nvest Nsights Q3 Newsletter

In our quarterly newsletter that follows, the two feature articles are titled: “A Great Story Never Told” and “Flying on One Engine”.  The first discusses the prevailing skepticism, or even outright pessimism, that may best characterize the consensus of investors’ psychological mindset relating to what is now the longest bull market in US history.  The second article explores what are the polarized and opposing views of how the economic and corporate fundamental “tea leaves” are being interpreted and highlights what we see are the biggest risks threatening to halt the progressing bull market. We encourage you to review the full articles contained in our quarterly newsletter below. The full printer-friendly document can be downloaded here: NVEST NSIGHTS 3Q

A GREAT STORY NEVER TOLD

Following a tug-of-war market experience during the first 6 months of 2018, stocks surged ahead during the 3Q with the S&P500 up +7.2%.  It was the fastest advance since late 2013. Combined with the first half, the accumulation brings the YTD rise to just over +10%.  Company earnings and economic growth are rising at the fastest pace of this current cycle and expanding the current Bull Market run, yet these facts remain a great story never told.  Few want to acknowledge this Bull Market is now the longest running ever.  Also, few will acknowledge that the current economic rebound will shortly become the longest running ever.  This current run approaching 10 years remains unloved for a variety of reasons, including the fact that many investors experienced 2 Bear Markets in 15 years.  Those two experiences eroded investor portfolio values and family wealth, and wreaked havoc with investor confidence.  In reality, the only situation where the length of this economic rebound and/or market advance is cited is when stating its age as a compelling reason to anticipate the current trends must soon end.  Many continue to hold a keen aversion to owning risk assets even today.

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“The Best Laid Plans…”

It’s often said that “no matter how carefully something is planned, things may still go awry”.  The saying is adapted from a well-known line in the Poem “To a Mouse” by Robert Burns.  Perhaps Mr. Burns was in the process of retirement planning when crafting this poem?  Regardless, its cautionary tone can be applied.  As we work with clients helping them articulate and achieve financial goals, there are a number of areas that can be underestimated relative to actual spending.

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