At Winthrop, we help our clients live life in the moment while boldly exploring and imagining possibilities for their future. Our approach enables us to explore every aspect of your life so that we can design a big-picture plan and investment solutions that balance practicality with opportunity.
Whoever you are, and wherever you are on your journey, our multi-generational team has all the tools and experience to help you pursue your financial goals—and live your life to the fullest.
From fast-growing startups and closely held family businesses to multi-generational enterprises, we will help empower you to operate more efficiently day-to-day, while laying a foundation for navigating the future.
We work closely and collaboratively with our endowment and non-profit clients to provide investment programs and hands-on portfolio management services pursuing global opportunities while seeking to ensure alignment with key business objectives.
We’re committed to seeking out and sharing the trends influencing markets and the outlooks that might inform our investment approach. In an industry like ours, being open to multiple viewpoints and fresh perspectives is a critical part of how we add value, and help our clients imagine all the possibilities.
In the world of finance, things change fast and there’s always more to learn. We’ve created a series of tools that will help you stay educated and keep you informed about the things that matter most.
Client Questions | September 20, 2021
We thought it would be helpful to provide data on how often the market experiences declines.
The S&P 500 is already up +21.6% for the year with very little volatility (as of August 31, 2021). In fact, the S&P has gone over two hundred trading days without experiencing a -5% decline, which is one of the ten longest stretches on record. We know that stocks do not move in a straight line forever and that upcoming volatility is inevitable. As we have written many times, no one can consistently forecast precisely when the market will decline. As such, we do not believe in making major changes to portfolios (i.e. market timing) in anticipation of potential upcoming volatility as that can be a futile effort (please see our Client Question on Why Market Timing Does Not Work). Rather than make wholesale changes, our investment process favors trimming on strength, buying on weakness, and tilting toward the asset classes we think will provide better risk/reward going forward.
Given that the last several months have been exceptional in terms of limited volatility, we thought it would be helpful to provide data on how often the market experiences declines. The following chart displays the S&P 500’s price and drawdowns since 1945, and the table shows how often the market has declined more than -5% over this period. Despite 125 declines of more than -5%, the S&P 500 generated a total annualized return of +11.4% over this time. A $10,000 investment in 1945 would have increased to over $47,000,000 at the end of the period.
A key pillar to our investment philosophy is to a maintain a long-term viewpoint as we know that markets can be quite volatile over the short-term. The stock market has historically gone up over time, but returns are not linear. Thus, while market declines are common and they can certainly be uncomfortable, we do our best to make lemonade out of lemons by utilizing these periods as an opportunity to make beneficial changes to portfolios. We do so by having the experience and technological systems in place to efficiently tax-loss harvest and reposition portfolios.
At Winthrop Wealth, our tag line is “with you for life.” For many of our clients, we are working with multiple generations, and our goal is to be a trusted resource for all their major life events. If a client takes a new job, starts a business, sells a business, retires, or starts a family we strive to be one of their first calls. If markets only went up and rules and regulations stayed static, the world wouldn’t need advisors, portfolio managers, or consultants. However, we know this is not the case. We believe we can make the biggest difference for our clients when things get challenging, when markets are volatile, and when the environment is changing (life events, new tax rules, new regulations, etc.). By having an experienced and credentialed team and a thorough understanding of our clients, their financial plans, and their investment portfolios, we can provide proactive and customized solutions that better fit their unique circumstances.
We apply a total net worth approach to both comprehensive financial planning and investment management. Financial planning drives the investment strategy and provides a roadmap to each client’s unique goals and objectives. The comprehensive financial plan defines cash flow needs, is stress tested for various market environments, optimizes account structures, considers tax minimization strategies, and continuously evaluates financial risks as circumstances and/or goals change. The investment management process is designed to provide well-diversified portfolios constructed with a methodology based on prudent risk management, asset allocation, and security selection.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.
The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
Financial planning is a tool intended to review your current financial situation, investment objectives and goals, and suggest potential planning ideas and concepts that may be of benefit. There is no guarantee that financial planning will help you reach your goals.
Likewise, it is important to remember that no investment strategy assures success or protects against loss. Asset allocation does not ensure a profit or protect against loss. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk. All investing involves risk which you should be prepared to bear.
Rebalancing a portfolio may cause you to incur tax liabilities and/or transaction costs and does not assure a profit or protect against a loss.
All indexes mentioned are unmanaged indexes which cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. Past performance is no guarantee of future results.
The Standard & Poor’s 500 Index is a capitalization weighted index of 500 stocks designed to measure performance of the broad e market value of 500 stocks representing all major industries.
This information is not intended to be a substitute for individualized tax advice. We suggest that you discuss your specific tax situation with a qualified tax advisor.