Game point! – Nvest Nsights Q2 ’24 Newsletter

Click here for a Printer Friendly PDF which also includes benchmarking and data on investments widely utilized in our current tactical strategies.

Game Point! | Steve Henderly, CFA

Tennis great Roger Federer won nearly 80% of the 1,526 singles matches he played over his career.  Yet you might be surprised to learn that he won just 54% of the points in those matches!  Even top-ranked tennis players win barely half of the points they play… which also means they lose almost half of the points they play.  Interesting.  In Charles Ellis’ book, the “Loser’s Game”, stock market investing is likened to the game of tennis.  In that book, he explains that success is determined by avoiding big mistakes and keeping the ball in play rather than by attempting aggressive hits.  We can’t help but feel the analogy aptly applies to the deceptive allure of the S&P 500’s performance YTD – where performance is being driven by the spectacular gains of a few mega-sized tech companies.

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The Bumps We Climb On – Nvest Nsights Q1 ’24 Newsletter

Highlights from our latest Nvest Nsights newsletter:

  • The Bumps We Climb On – If you knew stocks would experience two bear market drawdowns over the next four years, would you be willing to own them in your portfolio?
  • The Next “Financial Eclipse” – Just as the moon veils the sun’s brilliance, we will all experience various “financial eclipse” events in our life.
  • Mission (Not Yet) Accomplished – Inflation data disappointed to the high side two months in a row suggesting the Fed should not rush to cut interest rates, yet markets marched higher.  What lies ahead?

Click here for a Printer Friendly PDF which also includes benchmarking and data on investments widely utilized in our current tactical strategies.

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2023 – The Year of the “M&Ms” – Nvest Nsights Q4 ’23 Newsletter

M&Ms candy was first introduced to the public in 1941, inspired after Forrest Mars Sr. relocated his Mars candy company to England and encountered British soldiers eating small chocolate beads encased in a hard sugar shell.  This shell prevented chocolate melting in the heat of summer (melt in your mouth, not your hand).  A couple other interesting facts: M&Ms were sold exclusively to the US military during WWII.  Between 1976 and 1987 there were no red colored M&Ms and the color blue was not added until 1995.  M&Ms were the first candy to travel into space (1981).  Who doesn’t like M&Ms?

Reflecting on investing in 2023, it might be appropriate to label it the year of the M&Ms.  That’s because two investing themes dominated investor behavior throughout the year: Money Market Funds and the Magnificent 7(1).

Click here for a Printer Friendly PDF which also includes benchmarking and data on investments widely utilized in our current tactical strategies.

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“Too Many Moving Parts” – Nvest Nsights Q3 ’23 Newsletter

After a nice start to 2023, the market soured in the 3Q.  Both stocks and bonds struggled against a backdrop of too many conflicting signals.  Some data such as resilient employment and consumer spending suggests inflation is easing and economic recession may be avoided; but a contracting money supply, abruptly rising interest rates and energy prices, and uncertain government spending suggest economic pressure is building and is causing stock prices to contract.

Hamas’ attack on Israel over the weekend (on top of ongoing situation between Russia/Ukraine) seems to create additional fog in the short-run.  We’ll continue to monitor what these developments may mean for the market.  In the meantime, this quarter’s newsletter reviews:

  • Too Many Moving Parts” – we explain how many different moving parts not functioning together, can create a frustrating market environment with elevated volatility but no apparent trend.
  • New Reality” – Interest rates are now at their highest level in 16 years.  While it feels unfamiliar, history would suggest rates at this level are not a bad omen for the future, but they do not make economic conditions easy either.  How long might rates stay high if inflation is improving and what does it suggest for financial assets?
  • Flying Blind – Ecstatic Appreciation” – Bill offers quick reflection and appreciation for the opportunity to work with so many wonderful clients over his 45 year career.  As throughout life, “Flying Blind” also offers relevant parallel as investors often feel foggy about the future.
  • The Wealth Feedback Loop” – the wealth effect can cause individuals to alter their consumption behavior, and we discuss why it is important to balance significant financial decisions with actual income rather than fluctuations in net worth due to market variables.

Click here for a Printer Friendly PDF which also includes benchmarking and data on investments widely utilized in our current tactical strategies.

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

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

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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“Goes Without Saying” and a “Stitch In Time” – Nvest Nsights Q1 Newsletter

After nearly two years of strong market gains, investors experienced their first meaningful pullback during the first quarter of 2022.  While it is typical for markets to experience pullbacks and a higher level of volatility after the initial 12-18 months of a new bull market, it is never welcomed or comfortable.  That is probably because the uncertainties that usually accompany them are always unique.  Present uncertainties include a still fractured global supply chain, a Federal Reserve that finds itself needing to raise interest rates and tighten monetary policy in pursuit of arresting inflation that is running at the hottest pace in 40 years; and of course Russia/Ukraine which muddies both challenges further.

This quarter our Nvest Nsights newsletter shares what we’re watching and perspective to the topics/questions we’re most frequently hearing from clients.  Perhaps it “Goes Without Saying” that the backdrop highlighted above implies 2022 will likely remain a challenging year; but there are also some important messages to be heeded from history.  There is also the saying that “A stitch in time saves nine”;  while ‘main street’ consumers may not welcome rising interest rates and the impact on the cost of borrowing (or the markets in the short term) it is nonetheless appropriate for the longer-term health of the economy.  The markets are adjusting to a changing investment landscape.  We close the update with our personal finance theme article with a change coming to employer 401k statements this year.  Will the new Lifetime Income Estimates being provided help you feel more secure?

A printer-friendly version of the full quarterly newsletter, including benchmarking and fund performance data, can be obtained here: Q1 Nvest Nsights

As always, please do not hesitate to let us know if you have any questions or would like to coordinate a time to visit.

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