Meme stocks, Real-Estate, Initial Public Offering (IPOs), Special Purpose Acquisition Company (SPACs), Bitcoin, and Precious Metals – what do all of these share in common? Each is an example of an investment or asset currently receiving lots of “buzz” and client curiosity. While we do not typically follow these items intimately and prefer the diversification and liquidity of traditional mutual funds, bonds, and ETFs, we do not necessarily have anything against a client owning other assets when the exposure is properly managed. We do encourage anyone exploring ideas that are receiving intense attention from the media or “peers” to proceed with caution as the waters are often dangerous. If we were lifeguards at the beach, we would hang the yellow flag on the chair, “proceed with caution.”
Category Archives: Quarterly Newsletters
“Green Light = GO!” – Nvest Nsights Q1 Newsletter
March marked the one-year anniversary of last year’s stock market low, as COVID fears continued to intensify and lockdowns were beginning. Since that time, a flood of government support prevented the economy from enduring a depression and fueling a remarkable market rebound.
The first quarter of 2021 provided investors additional growth. Another round of government stimulus and an accelerating pace of vaccination is driving optimism unleashing pent-up demand, reinforcing the investment theme “Green Light = Go!“. Yet returns tend to be less exuberant and more volatile as new bull markets enter their second year. This is not a “bearish” forecast; but rather an acknowledgement that market dynamics can be more frustrating in “Year Two Following the Low” even as economic fundamentals become more robust.
Indeed we are already experiencing a more choppy start to 2021. Much of the volatility relates to concerns about inflation – a topic of frequent client questions as the huge sums of government spending are recognized. The “Roaring 20s” was a decade of surging economic growth following recovery from wartime devastation and pent-up demand. 100 years later, there are some interesting parallels and other key ingredients causing many to wonder if higher inflation is on the way and how it may impact their portfolios.
Our personal finance article this quarter, “ARPA What?”, reviews how the most recent economic stimulus package is way more than direct payments to individuals/families; some strategic planning opportunities exist for many even if they do not qualify for a stimulus check.
A printer-friendly version of our quarterly newsletter can be obtained here: Q4 Nvest Nsights
ARPA What?
On March 11, Congress passed a third round of COVID-related stimulus via the American Rescue Plan Act (ARPA) with a price tag of $1.9 trillion. This latest package – months in the making – is best known for direct payments of $1,400 to qualifying persons and each of their dependents. A more abrupt income phase-out (adjusted gross income of $75,000 or $150,000 married filing jointly) made fewer people eligible this round. Those who are near that threshold may consider making a deductible IRA contribution for example. But stimulus payment eligibility aside, there are other provisions in the bill that may provide you with some strategic planning opportunities – even for those who do not qualify for direct payments.
“Tragedy or Miracle?” – Nvest Nsights Q4 Newsletter
We are thankful for your continued support and for receiving our guidance and advice on investing and “LIVING LIFE” financial planning during the last year – a year which could either be characterized as a “tragedy” or a “miracle”.
Whatever your perspective, 2020 offered BIG surprise (global pandemic, lockdown; or the financial market response to it all?). In this quarterly newsletter we provide brief articles below which aim to provide context about the year we all just experienced and the reaction of the financial markets; what we are focusing on in the year ahead with the dawn of both a new President and congressional political composition; and ponder what unexpected developments might occur.
Our personal finance article this quarter, “Light Bulbs Reveal a Better Idea“, discusses how helpful a big-picture view of your financial position is when the market inevitably encounters unexpected surprises. We observe clients who partner with us in our “LIVING LIFE” financial planning effort so often experience a “light-bulb”, epiphany moment.
A printer-friendly version of our quarterly newsletter can be obtained here: Q4 Nvest Nsights
Light Bulbs Reveal a “Better Idea”
In 1967 Ford unveiled a “see the light” marketing campaign for its new Mustang. That campaign utilized a light bulb which was turned on to illuminate the room with the new Mustang model. This symbolized how seeing something in a new light can result in an epiphany moment – the message: “Ford has a better idea”, a different approach.
“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
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.
The Higher Wages of Growth – Review of Recent Economic Stats
In case you missed it as most of the media did, the Wall Street Journal (September 17, 2020) published an article by this title. In essence – “Rising economic growth lifted all classes.” The US Census Bureau reported some interesting personal income statistics:
“65 Days… Now What?” – Nvest Nsights Q2 Newsletter
As we move into the 2nd half of 2020, we are struck by how much is changed from just 6 months ago. A global health crisis/pandemic thrust the world into what is arguably the deepest and sharpest economic recession in a generation’s memory. If that were not enough, the backdrop of acute economic pain combined with several most unfortunate societal tragedies to create a degree of social unrest not felt so acutely in many years.
Despite these dynamics, the 2nd quarter provided strong recovery for global financial markets. Most attribute this almost unbelievable market rebound to a forceful fiscal and economic policy response by governments globally. In this quarter’s newsletter (below), you’ll find 3 brief articles. The first, entitled “65 Days… Now What?”, places the strength of the stock market since the March 23 low in historical context and reviews the actions we pursued early in the 2Q to position portfolios for economic recovery; “Offense Still on the Field” explains how the process of reopening the economy will remain complex amid lingering fallout from the reality of covid-19. Lastly, “True vs. True? And Truth!” examines the Great Depression era (1930’s) and the series of what are now considered consecutive policy mistakes that likely kept both the economy and financial markets impaired longer than if different actions were pursued. Studying these is relevant to the path forward.
A Focused Financial Life: New Tool to Aid Financial Fitness
1) Set financial goals; 2) Understand where your money is going; 3) Manage your debt; 4) Put your finances on autopilot; 5) Maintain a steady lifestyle; 6) Invest wisely; 7) Obtain knowledge and advice.
At Nvest, our primary goal we strive to achieve with each client is “delivering financial peace of mind.” We believe this goal is best achieved through regular communication; a prudent, time-tested approach to investment management; and via a strong and detailed understanding of how your accumulated assets form the big picture, “financing” you through each stage of your life. In these respects, we are excited to introduce and make available to clients a new tool we call the LIVING LIFE client portal.