One and Done? | Steve Henderly, CFA | Nvest Wealth Strategies®

Printer Friendly PDF: Nov 2024 Commentary

Twenty years ago, an influx of dominant high school basketball players caused controversy among the NBA and its players union, and in 2005 the “one-and-done” rule was implemented.  The rule stipulated players coming out of high school must spend at last one year at the collegiate level or alternate organization to better prepare for the physical and mental demands of the NBA.  While “one-and-done” is generally associated with athletes fixated on going pro, a dramatic reversal higher in interest rates last month leaves some already questioning whether the Fed’s recent pivot to rate cuts will be “one-and-done” after the FOMC meeting this week.

Continue reading→

Air Pockets | Steve Henderly, CFA | Nvest Wealth Strategies®

Printer Friendly PDF: Sept 2024 Commentary

One of the biggest thrills for roller coaster aficionados is the sensation of free-fall in their stomach as the train makes its way over the edge of the first drop.  Perhaps you’ve experienced a similar sensation during a flight where there was turbulence or an air pocket.  If it was unexpected, it probably caused brief anxiety.  Earlier this year, a flight from London to Singapore was going smoothly until the plane experienced a sudden and dramatic change in altitude, dropping nearly 200 feet in less than 5 seconds.  Panic probably best describes what passengers felt.  A drop like that can throw anyone not securely in a seat belt into the  ceiling and then quickly crash back down; more than half of the flight’s passengers required medical treatment as a result of this unexpected air pocket.

Continue reading→

Signs of Life | Steve Henderly, CFA | Nvest Wealth Strategies®

Printer Friendly PDF: August 2024 Commentary

Ever feel confused by highway signs?  “Slow Children at Play”, or “Caution Pedestrians Slippery When Wet.”  A traffic sign in England says, “Right Lane Must Turn Left.”  Or how about “Entrance Only.  Do Not Enter”.  And if you see a large sign announcing, “Welcome to Accident,” you’re probably entering the town of Accident, Maryland.  I’m sure you can think of similar perplexing signs in your travels.  The world is giving us a lot of confusing signs right now, and sometimes we hardly know where we’re headed or what we’re doing.  The same is often true with investing; for example, good economic news is sometimes viewed as bad by the markets.  Or in the case of the last several years when inflation was running too hot, weak economic news is often viewed favorably.

Continue reading→

A number of years ago, a submarine being tested was submerged for several hours.  Upon returning to the harbor, the captain was asked, “How did that terrible storm last night affect you?”  Surprised, the captain exclaimed, “Storm?  We didn’t even know there was one!”  The submarine was so far beneath the surface that it reached what sailors refer to as “the cushion of the sea” – a depth in the ocean where the waters below are never stirred despite commotion on the surface.  While not possible to duplicate with investments, we try to “slowdown” the oft-fast paced world of “do-anything, go-everywhere, get-it-done” that creates undue stress in life.  Can we deliver financial peace of mind allowing one to remain calm within “the cushion of the sea?”  The proven way is through a disciplined & repeatable process – “buckets of time” and LIVING LIFE financial planning.  We offer several ideas to highlight important themes for investors to consider approaching the mid-point of 2024 – providing comfort in “the cushion of the sea.”Continue reading→

What child doesn’t know the story of “Goldilocks and the Three Bears”? In the classic fairytale, Goldilocks explores the home of three Bears who are out for a walk. In the story, Goldilocks created some problems for the Bear family; breaking a chair, sampling and eating all of another bears’ breakfast. She is ultimately found asleep in one of the bear’s beds but manages to quickly escape out the window and avoid disciplinary consequences for her trespass. Much like enjoying porridge of a perfect temperature, investors experienced attractive advance in their investments during Q1 of 2024 due to an economic landscape that seemed “just right”: lower inflation and a resilient economy. It was believed these favorable dynamics would permit the Federal Reserve to not only stop raising interest rates but cut them multiple times in 2024, bringing relief to those with elevated debt before any painful “discipline” was experienced.Continue reading→

How long can you hold your breath? Can you hold it longer under water, or does the anxiousness of being submerged lessen your ability? Taking this analogy into the economic world of interest rates…when interest rates are at levels above inflation, defined as “positive real interest rates,” it’s akin to holding your breath underwater. Building further on this idea, are Artificial Intelligence (AI) stocks like an oxygen tank providing the financial markets the ability to keep swimming? How long can this condition last; how long will the oxygen tank allow us to remain underwater?

Continue reading→

In 1970, baseball great Ted Williams was quoted saying “a good hitter can hit a pitch that is over the plate three times better than a great hitter with a questionable ball in a tough spot.”  And second, “Obviously you don’t just ‘guess’ curve or ‘guess’ fastball – you work with a frame of reference, you learn what you might expect in certain instances, and you go from there.”  Perhaps it’s the coaching of my two sons’ baseball teams, but isn’t it interesting the parallels between sports and investing?  Successful investors strive to identify “fat pitches” to hit instead of chasing bad ones.  If playing basketball, it’s taking the “lay up” instead of shooting for 3-points.  Why take increased risks by hitting pitches out of the strike zone, or shooting for 3-points?  Why not seek the “fat pitch” or “lay-up” areas of the market that appear ripe for accelerating performance?  After many years of repeated leadership, the most expensive areas of the market (mega-cap tech stocks) seem overdue for a break.  They are priced to perfection, and thereby risky.  Should you swing at the risky-to-hit pitch regardless of the count or game situation?

Continue reading→

Shipping and logistics firms often cite that it is the last mile of delivery which is the most expensive and complex in coordinating.  And seasoned runners report that it is the last mile of a race that often seems most difficult.  Some may say the middle mile is challenging – too far to turn back and yet a long way to go.  Nevertheless, it is that final mile which requires every drop of will power and can seem significantly greater in distance compared to earlier miles. As one who does not run long distances regularly, I participated in a Thanksgiving Day “Turkey Trot” with my family and neighbors, perhaps to justify eating too much and watching football later that day.  It seemed do-able and fun when signing up a month before.  And as we began, it seemed easy at first to keep pace with my 11-year-old son; but fatigue seemed to set in early.  I’m certain there are other examples where the challenge seems to grow toward the finish.  Might the same prove true with respect to lowering inflation without causing significant economic pain?Continue reading→