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

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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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401k Lifetime Income Estimates… Will You Feel More SECURE?

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If you are fortunate enough to have a company sponsored 401K plan, you will likely see some new (and potentially confusing) illustrations on your statements in the coming months.  The changes are related to the 2019 Secure Act passed by congress.  The mandate requires 401k administrators to provide an estimate of “guaranteed lifetime income” assuming your current 401K was completely “annuitized”.

What does it mean to “annuitize” your current 401k balance?  Continue reading→

Turn! Turn! Turn! – March Commentary

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“Geopolitical conflicts and/or exogenous events do more to reinforce trends already in place, rather than act as a catalyst for change (in the markets) – Strategas Research Partners.”  Gold is rallying; oil is in a bull run higher; value style is besting growth while Tech is a pronounced underperformer.  And Bitcoin –who’s strongest advocates claim it to be an alternative currency – is yet to offer any hedge or stability to risk assets.  These trends don’t change (because of geopolitical issues), just the urgency of them.  The horror and uncertainty of the Russian/Ukraine invasion is extreme; it is terrible, inappropriate, and immoral. It is most challenging to offer thoughts on how it will play out, as no one knows.  We can pray that it is a temporary geopolitical event which will hurt Russians economically, and will slow Germany and Europe economies (to a lesser degree), and will marginally slow other global economies depending on their connections to Russia/Ukraine.  At present, the US bond market is functioning normally (unlike March 2020 when COVID hit and the Great Lockdown was initiated).  There is increased volatility in all markets, but there is not dysfunction.  There is the normal, predictable flight to safety.  Please read our Special Market Update, “Market BUMPS to Climb On” from February 23 on our website, at www.nvestwealth.com.Continue reading→

Special Market Update: “Market BUMPS to Climb On”

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Special Market Alerts are generally undesirable to write. That’s because we never intend to raise alarm or create uncertainty. How should investors think about the first 10% correction of this new bull market? Certainly a correction was due following 23 months since the March 23, 2020 bear market bottom. From that time, the S&P500 jumped +121.1% to its last closing high on January 3, 2022 without even a 5% pullback. Since early January, investors ramped-up their worry about everything – sticky inflation at +7.6% (highest pace in 40 years); persistent supply and demand mismatches for products, services, and workers, creating shortages. When demand is greater than supply, prices will rise. In fact, someone said “Inflation is an economic problem, and also a psychological proxy for things being out of control.”

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There’s Plenty More – February Commentary

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We occasionally hear this idiom:  “There is more where that came from.”  It can be used in a negative, combative sense or in a positive, generous way.  The statement may be offered to a belligerent child – “if you do not shape up, there’s more to come.”  Alternatively, where there is strong achievement more success often follows.  In both cases the meaning is the same:  there is a reservoir just waiting to be tapped if needed.  Another famous statement:  “the barrel is only half full; or the glass is half empty.”  As we pass through 2022, will there be more market advance (from which it came), or are investors expecting the success to evaporate?  Is the longer market up-trend still viable, or are the short term worries about “everything” (inflation, interest rates, Russia/China/North Korea, oil, COVID variants and living life again) emptying investor sentiment?  How much more is to come – plenty more (of what)?!

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“Lowdown on 2021” and the “Journey into ’22” – Nvest Nsights Q4 Newsletter

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Happy New Year!  2021 provided a second, actually a third, consecutive year of double-digit investment returns for stocks (most forget 2019 because of how quickly the mood soured in early 2020).

This edition of our quarterly newsletter, Nvest Nsignts provides “the lowdown” on what themes drove the financial markets during 2021.  Perhaps of greater interest is our sharing of what we believe will be the biggest focus for investors as we “Journey into 2022“.  Our personal finance focus this quarter, “Healthy Habits” shares several easy-to-implement “resolutions” that can pack a powerful punch to enhance your long-term financial posture as you set plans for the New Year.

A printer-friendly version of the full quarterly newsletter, including benchmarking and fund performance data, can be obtained here: Q4 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.Continue reading→

Healthy Habits

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Are you setting New Year’s resolutions in pursuit of being a better version of you? Health and finance are two common areas of resolution focus.  When it comes to being healthy, people often resolve to sit less (move more), eat more nutritious foods, and of course exercise.  On the personal finance side, the most common ideas are to spend less and/or save more.  Sounds simple, but how can we make the resolution more intentional and enhance the probability of success… and your long-term financial “journey”?

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Ketchup Bottle Economy – December Commentary

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Getting ketchup from its bottle is often messy.  It never wants to flow easily.  The container must be shaken vigorously, or squeezed a lot to find that it still does not come out.  Eventually after enough frustration and squeezing, ketchup will flow – often after it explodes with too much red sauce going everywhere.  This month, title alternatives were “Ate Way Too Much” (at Thanksgiving), or “Monster Snow Storm” is brewing.  Both of these ideas relate to news/media sensationalizing new worries which then affect the financial markets.  Following 20 months of market advance with only minor pullbacks, most any new “worry” can cause the market to feel “bloated”.

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Peak “Stagflation” – November Commentary

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What is Stagflation?  Is the US economic environment traveling toward Stagflation?  The percentage of news articles mentioning “stagflation” is nearly double (37%) the previous high readings which occurred in the midst of two prior recessions of 2008 and 2001 (both at 21% – see chart at bottom of article).  The term stagflation combines two concepts – stagnation and inflation.  This condition takes place when economic growth stalls (or stagnates) at the same time inflation is elevated (or rising).  Accompanying stagflation is unhealthy levels of unemployment.  It occurs when some force or condition increases the cost of production, such as an increase in oil prices (1970s) or a supply-chain disruption (2021) giving rise to the prospects of slowing or stalling economic growth and rising inflation (higher prices).  A “supply-side shock” creates shortages of product (could be many products or materials), wherein the price of products rise quickly due to scarcity.  Similar to the 1970s, unemployment and availability of workers (today) add to the challenge of slowing economic growth accompanied with rising prices (inflation).  If this condition exists too long, it becomes “sticky”, and fighting or managing it becomes challenging.

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“All of the Above” Multiple Choice Questions & Pivot Points – Nvest Nsights Q3 Newsletter

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With the 3Q now complete but the stock market seemingly more choppy since September, investors wonder if the final 3 months of the year and 2022 might offer a resumption of upward trend.  For most, it’s a difficult consideration amid the confluence of BIG Government-related issues ranging from significant spending and tax proposals (infrastructure and social programs), a potential government shutdown (debt ceiling), whether Fed Chair Powell will be reappointed, and more.

In this quarter’s update, “All of the Above” we review the reasons we see for the stock market losing momentum in recent months, September in particular.  We also believe that the Great Lockdown response to COVID will be viewed as a “Pivot Point” in a variety of ways, but including how investors think about inflation, interest rates, and asset allocation.  Related, September 30 marked the 40th anniversary of a secular bull market for bonds.  What might the next 40 look like?

The personal finance discussion this quarter provides a quick summary of what we see are the most likely tax changes coming as a result of current proposals.  As you might imagine, this is a topic arising in most every client conversation this year and we hope you find the quick bullet format helpful.

A printer-friendly version of the full quarterly newsletter, including benchmarking and fund performance data, can be obtained here: Q3 Nvest Nsights

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