“Lift-off! Do We Have Lift-off?” – Nvest Nsights Q2 ’23 Newsletter

With the midpoint of 2023 now crossed, we hope that your summer is off to a nice start.  For the financial markets, things certainly appear better behaved compared with a year ago.  In fact, the rebound over the last 9 months is now being labeled by financial media a “new bull market”… yet narrow enthusiasm from just a few stocks casts doubt on that idea.  Below are links to access our just published Nvest Nsights newsletter articles, and your personal investment reports will be arriving soon.

  • Lift-off! Do we have Lift Off?” – provides a quick recap about how the 10 largest US stocks is influencing the appearance of broad index performance.
  • Quandary in the Quarry” – Economic indicators continue to signal slowdown is on the horizon?  Can the current stock market advance continue and participation broaden?
  • Driving Hands-Free” – AI, or Artificial Intelligence, garnered big hype in the 2Q; the idea of automation everything inspires long-term hope for new gains in productivity, but also creates anxiety.  Another form of AI, hands-free driving, can also be likened to how many approach investing… but is it safe?
  • Personal Finance Corner” – An update on how ebbing inflation is beginning to impact savers via iBond rates and what to expect if continued improvement occurs.  Also, we briefly review how large or lumpy withdraws can be accompanied by unwanted surprises from Uncle Sam.

Click here for a Printer Friendly PDF which also includes benchmarking and investment data.

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Uncle Sam’s Unwanted Surprises & Inflation Ebbs Lower

Inflation Begins to Ebb Lower – Impact to Savers

In recent articles titled iPod, iPhone, iPad… now the I Bond and The Upside to Rate Hikes, we highlighted the positive impact of the Fed’s ongoing battle with inflation.  Mainly, savers are once again being rewarded with “reasonable” rates.  I-Bonds were rewarding savers with rates approaching 10% just a few short months ago!Continue reading

“Optical Illusions” – June Commentary

Harry Houdini, David Copperfield, and Penn & Teller are considered among the greatest magicians of all time.  Magicians utilize a combination of sleight of hand, misdirection, and other techniques to create the appearance of executing seemingly impossible or supernatural feats.  Recall seeing their tricks such as sawing a live person in half, escaping from an impossible predicament, or levitating (floating in air)?  These skills are developed through practice, study, and the mastery of various techniques.  The best magicians incorporate elements of storytelling, humor, and showmanship to enhance their performances and engage the audience.   It is important to note that magicians are not actually performing real magic or exercising supernatural powers.  Rather, performances are based on skillful techniques and principles of illusion designed to create a sense of wonder and amazement.  The secrets behind their tricks are closely guarded, and the magician’s code of ethics often prohibits revealing the methods used to perform illusions.  In essence, they try to “fool us.”

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“When in Doubt, Zoom Out!” – May Commentary

Investing your life savings over time will be an emotional journey.  Investors will find themselves exuberant by rapid growth in value at the start of a new bull market.  And then become exasperated when bear market conditions erode gains and value in quick fashion.  During years of managing investment portfolios, it most often feels like a slow random walk; sometimes like a walk in the desert that is boring.  Since the onset of current bear market conditions 15 months ago, it is understandable for investors to get caught up in stress, anxiety and even unhelpful thoughts and emotions.  Rainy days are never fun compared to sunny times. Comedian and actor Reggie Watts(1) shared this phrase, and  Melli O’Brien(2), a mental strength coach, promotes the idea by sharing about a favorite practice called “when in doubt, zoom out.”  When we become fixated on our anxieties and struggles, our problems and worries, or our insecurities, they can become very intense and overwhelming; even giant-like.  Everything else gets overshadowed and hidden.  The practice to “zoom out” from whatever negativity is creating issue, helps one see a wider perspective and thereby find some “breathing room” or much-needed mental space.  Let’s develop this thought relative to our current bear market concerns or worries.  Let’s “zoom out” on two topics influencing current and near-term market action.

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“Who’s Driving?” – Nvest Nsights Q1 ’23 Newsletter

We are encouraged by the beginning of Spring weather, and hope this note finds you the same.  For investors, both stocks and bonds finished the 1Q with gains, but it was anything but easy.  Stocks vaulted higher in January on renewed hope from investors that the Fed just might stick the proverbial ‘soft landing’ for the economy and be able to end its rate hiking campaign.  But in February economic data remained just too-hot and was again viewed as “bad”, counter to the idea the Fed could stop or even slow its tightening, sending the markets quickly back down.  As the bond market quickly priced-in additional rate hikes to come from the Fed, two “weak-link” banks broke in early March and ushered in several weeks of fear about the viability of the global banking system.  Quick steps taken by policy makers seemed to calm those worries and permitted stocks to claw back into the black by month-end.

But where do we go from here, and what should investors make of recent market performance and confusing sector leadership?  This quarter we offer the following brief articles:

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Are My Assets Safe?

Nvest, since its inception, has utilized the brokerage and custody services of Charles Schwab & Co.  We consider Schwab to be the industry leader based on its history, low fees, and industry leading technology; it is also long considered one of the most conservatively managed asset custodians in the industry.  While the entire industry continues to undergo significant changes via consolidation and expanding access to investing via cost reductions (advocating for no-load mutual funds, elimination of trading commissions, account maintenance fees, and more), Schwab’s commitment to client security and financial stability remains unchanged. For example, Schwab avoids underwriting new securities issuance, does not hold or permit direct investing in risky or highly speculative assets (such as cryptocurrency), and remains highly protective of client assets.

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Special Market Update – Weak Chain-Links Break

Bank regulators were caught off guard last week as three banks failed.  First Silvergate Capital, then Silicon Valley Bank (SVB) on Friday, and Signature Bank over the weekend.  Bank failures are rare.  Yet, it should not be a surprise when a weak link in the chain breaks as monetary conditions tighten via higher interest rates and minimal money supply growth.  History shows that leveraged situations become strained when financing costs rise and economic conditions slow.  That is our present situation – slowing economic growth due to fast rising interest rates to fight high inflation.

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“Mr. Kadiddledopper, He’s Confusing” – February Commentary

Do you know, or ever meet, a Mr. Kadiddledopper?  If so, you’d surely remember.  He is a man of opposites.  Kadiddledopper is a guy who lives in a small town, whose house looks badly in need of painting; yard needs mowing; landscaping is overgrown with tall weeds woven in; and a broken picket fence with peeling paint.  Even his clothing announces a reclusive personality.  The town folk don’t know how to relate to him.  Mr. Kadiddledopper speaks in opposites.  Understanding his talk is challenging and confusing.  “Bye. Sure is cold today,” he says when greeting you on a humid 90 degree day.  Caution when following his directions – turn left when he says go right; stop means go, and go means stop; up-town means down-town.  When he answers “no,” he really means yes, but a most peculiar exception is “Yes” always means yes.  Is there such a real-life person?  Not sure; I created my fictious guy for humorous “fun” with young grandkids.  Ever struggle with a toddler who says “no” to everything?  Try instructing them that “no” means “yes,” and “yes means “yes.”  You may still be frustrated and certain that opposites don’t work.  “Don’t try it” with your spouse, and definitely not in public!  You will discover it’s easy at first and gets harder with practice.  [Italics will denote opposites to avoid confusion.]

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“Dog Gone ’22!” – Nvest Nsights Q4 Newsletter

We hope you enjoyed a nice holiday season and are entering 2023 in good health and spirits, optimistic for what the year ahead might bring.  For many investors that may feel difficult given the stormy market environment; yet we should each resolve not to give way to unreasonable pessimism either.   This quarter we offer several items in our newsletter:

  • Dog Gone ’22!” – some of the most friendly words we could come up with to convey the frustration that most probably feel for the investing experience over the last year, but more importantly a quick review of the factors that influenced both the stock and bond market.
  • Snoozer Cruiser – Dreams for ’23”  and “Portfolio Tactics” – We share the key items we are watching; what they might mean for investors in the year ahead; and how we are strategically positioning portfolios.
  • The Upside to Rate Hikes & Secure Act 2.0” – The Fed’s aggressive rate increases last year are not all bad… we share some ideas for how(where) you can get paid significantly more on your cash.  Also, some quick highlights about the just passed Secure Act and how it may impact you.

Click here for the Printer-friendly PDF version including benchmarking and fund data   

We hope these updates are helpful and encourage you to review.  Please do not hesitate to call or email with questions, or to coordinate a time to visit together.

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