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

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If you’re feeling a bit of motion sickness from the markets over the past eighteen months, you are not alone. Markets have been on a bit of a roller coaster - now returning to the same platform where we all got on the ride, with the market recently crossing over to all time highs. But in the meantime, investors have experienced sudden drops (December 2018), quick ascents (Q1 2019), and even a few loopty loops (May 2019).

What’s been the best place to sit? This chart for Charles Schwab illustrates how each rally has been led by a different “car”, making it a bit difficult to ascertain where one should sit from here on out

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How’s the ride been in 2019? Markets have been very strong in 2019, with several markets (such as the S&P and Dow Jones Industrial Average) reaching fresh highs in recent days. Below is a summary of market performance YTD

What will the ride look like from here? One thing markets have proven over the past month is that even the best predictions and thinking can be proven wrong. So, of course, our thinking is by no means a guarantee of what is yet to come. However, from where we sit, we remain constructive on a well-diversified portfolio with a slight bias towards equity securities. This is not to say there aren’t many risks that could disrupt markets in the short-term (ie: tariffs, geopolitical issues, upcoming election, recession potential). However, in a world where US interest rates sit near historic lows (and are expected to be lowered further later this year), it remains paramount for savers to incorporate some level of risk assets into their portfolio in order to achieve their desired growth. However, at all time highs, now may also be a wise time to review your actual vs. target allocation and adjust any imbalances/overweights

How can I stay on the ride? This is one of the hardest things for investors to do - stay seated no matter how rough the ride. It’s easy to want to flee (ie: go to cash) right after the drop, as it makes us feel like the downward movements will never stop. There is no quick-fix to fight this sensation, however, one tool we use is focusing on cash flow and liquidity needs. How do you do this?

First step - determine how much money you need your portfolio to “pay you” each year to achieve your goals/desired lifestyle. Second step - multiply that amount by 4-6 years (which is the likely duration of a recession, using 2008 as a guide). Note, if you are not yet living off your retirement but plan to within that time period, it may be worth including the years before retirement, plus this range.

Compare that result to the funds (in $) you have allocated to cash equivalents and fixed income (you could also include your annual dividend/interest income in this calculation as well). If you have at least that amount in these categories, in our view, the “ride” shouldn’t be of primary concern to you as you know that your near term needs will be met as your risk assets are allowed to keep growing (albeit perhaps not along a straight track). That is the price you pay for higher return potential over time. But provided you have sufficient liquidity and cash flow on hand, sit back and enjoy the ride (and maybe put a bit of cash to work after a swoon). (Note: everyone’s situation is different. Please work with your financial advisor to determine the allocation and approach that is appropriate for you)

What’s around the next turn? We’ll find out together. Stay buckled in and enjoy the ride. Investing is a privilege and should be viewed as such - even when the ride gets a little bumpy.

Invest on,


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

During the first four months of 2019, it seemed as if nothing could get in the way of markets. While uncertainty remained (tariffs, interest rates, economic strength, recession worries), markets ticked higher seemingly every day. In early May, that all changed. See below for market returns during May 2019

While it’s hard to know what caused markets to retreat, the declines appeared to begin with President Trump’s tweets that trade negotiations with China had stalled and that the planned tariffs were going to be implemented. this was a sufficient shock to cause buyers to retreat and sellers to materialize, driving prices down. Since that time, volatility has again returned, markets have pulled back from their highs, and once again, investors may be questioning whether they want to stay invested.


These downward moves never feel good - and sadly never get easier to stomach. However, when they do arise, we remind ourselves of an important adage - “it’s a marathon, not a sprint.”

We don’t view investing as a journey one should take for a month, a year, or even just a few years. We view it as a lifelong process that is ultimately guided by where you are trying to go (ie: simply put - what does your ideal future look like and what financial levels are needed to support that). If you have defined your destination and have a plan in place to reach it (ie: a diversified investment mix and a savings plan), all there is to do during times of market stress is to keep putting one foot in front of the other and follow your pre-determined road.

As you continue down the path, here are a few helpful reminders:

1.) Panic is not a strategy - business media and newspaper headlines will oftentimes incite panic in even the calmest investor. Resist this urge! Oftentimes, the exact moment we feel most encouraged to take action is the worst time to do just that

2.) Revisit your plan - we have worked alongside you to put plans in place to grow your wealth over time, while supporting any near-term liquidity needs. Again, think of assets classes in terms on liquidity buckets. If you have sufficient liquidity stores in your cash/fixed income buckets, short term volatility in equities is unlikely to have any near term impact on your day-to-day life or your long term plans

3.) Over time, investing is on your side - as this insightful chart from Blackrock shows, historically, the longer you are invested in the market, the lower the odds that you will lose wealth. While history may not repeat itself, it certainly has a tendency to rhyme

4.) Don’t miss a few days - this additional chart from Blackrock shows how missing a few major upside days in the markets over time can hurt the compounding of wealth. When will the next one occur? It’s impossible to know, which is why timing the market is so difficult

We know these sharp moves in markets can be unsettling. But when they occur, take a step back, revisit they few key reminders, and keep on running.

Invest on,