“Forward Expectations & UNCH” – Nvest Nsights Q3 Newsletter

Investment growth was furiously positive in the six months following the March lows, besting even the same interval of time following the “Great Financial Crisis” of 2008.  In “Forward Expectations“, we review that while history shows the forward return pace typically slows, performance remains positive – particularly when looking +6, +12, or +24 months forward.  While September reminded investors that challenges in reopening the economy persist amid covid-19, it is also good to recall that the 4th quarter is often the strongest performance season for stocks.  That pattern includes election years.  Should historical data not be convincing enough, we explain in “UNCH” how fundamentally significant are the “all-in” efforts of governments around the globe to support their economies.  One chart monitoring change in Money Supply “may be all one needs to know” over the next few years.  We should assume that uncertainty on many fronts will persist; and uncertainty results in volatility.  But “Fear of Volatility” reminds investors not to confuse volatility with risk of loss (they are very different); those who do are more prone to make permanently impactful errors when investing.

Also, if interested: The Higher Wages of Growth, provides a review economic stats recently published by the US Census Bureau.

A printer-friendly version of our quarterly newsletter can be obtained here: Q3 Nvest Nsights

Continue reading

Don’t Surrender to Cash

“Forced Perspective” is a technique employing optical illusions to make objects appear closer/farther, or bigger/smaller than they actually are.  Filmmakers would for example place a miniature dinosaur close to the camera so that it would look gigantic in the film.  Similarly, many tourists at the Leaning Tower of Pisa take a “selfie” with their smartphone camera, making it appear as though they are preventing the structure from toppling.  Reflecting on years of experience it is hard to recall a time where it felt like there was more uncertainty than the present.  A global pandemic, social unrest, and a polarizing US presidential contest are presently being placed very close to the “camera” by media, creating HUGE worry – a forced perspective.  We cannot recall a time where there were not several big worries simultaneously distracting investors.  The chart below provides just some past examples.

Continue reading