financial planning

View from the Chair: Windermere's Market Perspectives (February 2019)

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There were few investors who were sorry to see 2018 go. Market movements in October thru December brought returns for the year negative and erased most annual gains, all while worrying investors with significant daily movements and seemingly endless selling pressure.

Why did these sharp downward moves occur? Markets are complex and there is no way to fully unpack material moves (in either direction). Keep in mind what markets are and how they are priced: they are a collection of securities that represent a claim to a future stream of cash flows - and they are valued based upon what the present value of those future cash flows is believed to be at any point in time.

It is our belief markets were pricing in worst case scenarios on four major items at the end of 2018 (US growth, interest rates, trade, and political instability (the shutdown)) - the combination of which brought down the anticipated future cash flows from investments (and therefore the prices and aggregate market values). Add to that thin trading volumes during the holidays and year-end tax selling, and it was a dire situation for almost all markets

What’s happened in January? An improvement was seen on all four fronts, earnings continued to show strength and growth, and buyers returns - all of which has brought prices back up and returns materially positive for the month as shown below

Where will we go from here? As always, it’s impossible to predict the market’s next move but one thing is for sure: volatility will present itself time again and again (especially given where we are in the economic cycle). Here are a few strategies to keep in mind to help you stay calm and more importantly, stay invested should the material swings we saw in December reappear any time soon:

1.) Widen your lens - Investing is not meant to be a short-term journey. And odds are that you have been investing for several years at this point. While it’s easy to look at your returns from any one quarter or month, expand the time frame. Your return over a period of years or even decades are far more relevant. So if you must evaluate your returns in volatile periods, be sure to consider a longer time frame

2.) Revisit your goals - All investing should be done with intention. You should have a destination in mind - whether it be a targeted annual return or a needed withdrawal amount to fund retirement. When volatility arrives, evaluate the immediate (and known) impact on your goals. In all likelihood, the ability to meet your goals won’t be harmed by a short-term event and knowing that may help lessen your desire to react as well as your fears

3.) Stay in your Lane - People talk about all sort of things - investments included. You’re likely only to hear about their successes - the stock they owned that has doubled, their incredible gains, their unique investment opportunity. While other people’s wealth journeys may be interesting, they are not relevant to you. You don’t know the context, completeness, or accuracy of what they are telling you. Your journey and your facts are what matters. Just smile and acknowledge the conversation - and then return to your own lane

4.) Talk it out - Oftentimes, our own inner dialogue can be our worst enemy. If you have fears or questions when markets move swiftly, talk it out. Reach out to your financial advisor (you know where to find us) and walk thru everything you are thinking and feeling. A discussion and an empathetic ear may be just what you need

5.) Resist the urge to act- Time in the market is more important than timing the market. As illustrated by December and January, the sharpest down moves in the market tend to be followed by the sharpest moves up - and both can arrive when you least expect them to. The exact timing cannot be predicted and as a result, staying in the market and sticking to your long term target allocation is essential. If you feel the urge to act, do your best to stop yourself and stay the course

6.) Consider buying low - Market sell-offs many times present the best buying opportunities but unlike most other shopping experiences, investors hesitate to buy things on sale (for fear values could decline further). However, if you have a few stocks on a wish list and have done the work to determine the price you would be willing to pay for them, a sell-off may give you that chance. As Warren Buffett wisely says, “be greedy when others are fearful”

We know volatility is upsetting and hard to withstand. Try these strategies out next time the market moves sharply and hopefully they will help calm your nerves. We never said investing would be easy, but we certainly believe that it is worth it

Invest on,


View from the Chair: Windermere's Market Perspectives (December 2018)


I’m an avid reader of all things Seth Godin, including his daily blog posts.  This recent post stuck a cord and made me think of recent market activity.  *Be sure to visit the link to the post and consider subscribing!)

The title of the post was “String too Short to be Saved”, telling the story of a hermit who saved everything – including a box of string clippings he labeled “too short to be saved.”

As Seth explains, many of us are guilty of doing the same in our daily lives, accumulating the small slights and the daily worries. I venture to guess many of us have this habit when it comes to our financial lives as well.

Think of your investing journey. Are you saving any “short strings?”  - such as worry over mistakes we made in our past, regret of not having bought a certain stock, the concern that you aren’t on track, comparison to a family member’s wealth,  fear created by the daily business news, outsized attention to your portfolio’s movements in a given week, month, or even year.

My guess would be we all have a box of these investing short strings on a shelf in our minds.   We get lost in the trivia and focus on thoughts and ideas that in reality are too useless to even be saved.  But we save them nonetheless.

How can we begin to clear away this clutter?  How can we ignore these passing thoughts that don’t serve us and instead elevate the discussion and the matters that deserve our attention?  Here are three suggestions that I believe will help

1.)   Give yourself context – We all suffer from a recency bias, giving more weight to events that have occurred in closer proximity to today.  However, when it comes to your financial life, a longer-term perspective is essential as it is a journey that can last as long as 7+ decades for many of us!  Examine market trends, asset class returns, portfolio theory over at least a 10 year period.  You’ll see that the daily “short strings” are really not all that relevant (Suggested source: recent publication by Blackrock)


2.)   Know where you’re going and how to get there – A lot of short strings can be discarded if you have a clearer picture of where you are trying to get to – and a plan to help reach that destination.  How does it serve you to worry about a monthly market return if you don’t even know what return you need to earn to reach your goals? Some work clarifying your plans and designing a path to reach it is a much better use of your time and energy


3.)   Talk it out – Many of us hide our boxes of “string too short to be saved” from others.  We are embarrassed to share it with others, we feel vulnerable giving it daylight, and as a result, the collection grows and continues to distract us from doing the work that matters.  The surest way to work thru the clutter is to give it a voice.  Reach out to your financial advisor and other trusted professionals in your life.  Talk thru the concerns and questions you have.  You may find that these strings can be discarded to make room for what really matters

In Seth’s closing he asks, “What happens when we treasure the memories that serve as fuel, and ignore the rest?” Consider that question - and then get to work discarding your financial strings too short to be saved

Invest on,