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, expertise, and experience to help you reach 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 that maximize global opportunities while ensuring 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.
Updates | February 26, 2020
Volatility returned to the global markets in the last few days due to fears over the coronavirus. Since February 19th, the S&P 500 fell by -7.5% while the 10-Year Treasury yield reached a new all-time low at 1.31%. As we stated in our January Recap, a pullback in the equity market was somewhat expected after an increase of +31.5% in 2019. The latest selloff only takes the S&P 500 to its mid-December 2019 level. The equity market does not usually go up in a straight line, and some volatility is perfectly normal. Over the last 40 years, the S&P 500 has averaged intra-year price declines of -13.8%. We will continue to help our clients navigate through challenging markets by ensuring their short-term cash flow needs are covered, while managing the rest of their assets in globally diversified portfolios designed to meet longer-term goals.
We will provide detailed commentary in our February 2020 Recap next week. However, we would like to put the current selloff in perspective by referencing some of our Client Question of the Month pieces that address these volatile environments
Benefit of a long time horizon – S&P 500 performance over 10-Year periods (May 2019)
Our main takeaway from this analysis is that equities have generally produced positive results over long-time periods. This reinforces our philosophy that the best approach is to maintain a long-term viewpoint as equity markets can be extremely volatile over short time periods. Periods of market weakness also create opportunity for long-term investors as they can reallocate to more attractive securities, execute tax loss harvesting strategies, and/or add new money to purchase at lower prices. We understand that no one likes market declines, but we can use these periods to our client’s advantage by making meaningful adjustments and improvements to their portfolios.
Market volatility is common (November 2018)
Despite overall positive returns since 1980, there were plenty of declines along the way as the average intra-year price decline was -13.8%. The data makes sense as since 1950 the stock market has averaged at least one correction each year. Since we plan for stock market volatility and we incorporate these assumptions into our financial plans, we are less likely to overreact when it happens.
Markets climb a “wall of worry” (February 2019)
An old investment adage is that the stock market climbs a “wall of worry.” This simply means that the market has risen over time despite a constant barrage of potential risks that could cause a correction or decline. Each quarter we publish our own set of potential risks along with our market outlook. Our role at Winthrop Wealth is to help our clients identify and manage risk and navigate through the noise by providing a detailed financial plan combined with a structured, consistent, and repeatable investment process.
Market timing does not work (January 2019)
Market timing is an investment strategy that is implemented by selling a large portion of equity holdings when the market is high, patiently waiting on the sideline as the market declines, reinvesting at the market low, and then riding the market back up to new highs. Rinse and repeat. Although this might sound easy, the reality is that successful market timing is nearly impossible to execute consistently. Keep in mind that if an investor discovered the magic formula to market timing, they would essentially be able to make an unlimited amount of money. There is no magic formula.
Negative Interest Rates (August 2019)
Negative interest rates could occur in the United States under two scenarios, either the Fed¬eral Open Market Committee (FOMC) sets the federal funds rate below zero or longer-term bond prices increase enough that their yield goes negative (bond prices move inversely to yields). Our conclusion is that negative interest rates are not probable under normal circumstances and only possible in a severe economic recession. Minutes from the October 2019 Federal Reserve meeting stated that, “negative interest rates currently do not appear to be an attractive monetary policy tool in the United States.”
Inverted Yield Curve (March 2019)
A yield curve inversion occurs when short-term Treasury bond maturities have higher yields than longer-term maturities. Historically, the average lag time between a yield curve inversion and the start of a recession has been about a year-and-a-half. As always, we will remind our clients not to overreact to a single data-point and highlight that a yield curve inversion is only an indicator – it does not in and of itself cause a recession. We are closely monitoring the yield curve and other recession indicators, but for now our outlook is another year of decent economic growth.
At Winthrop Wealth, 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, 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. As always, please contact us if you have any updates to your personal or financial circumstances.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.
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 domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
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.
Securities offered through LPL Financial, Member FINRA/SIPC. Investment Advice offered through Winthrop Wealth Management, a Registered Investment Advisor and separate entity from LPL Financial.