The Nvest Market Blog, our current thoughts on the Street

Special Market Alert: Vision is Foresight

posted 05.19.2010 at 4:43 p.m. by steve

Today we prepared a special market commentary in light of the ongoing events. We encourage you to read it through as we believe it provides some historical context for what is currently being experienced. Most importantly, we are reminded that corrections of 10% are not an uncommon occurrence in the first 24 months of a new bull market, having occurred at least once in 7 of the 11 bull markets since 1941.

Recent events have changed the tone of what many are feeling. Our base case, or vision is that the current bull market remains underway with the current hiccup largely past (market has become very oversold and due for rebound on a number of measures). However, we are vigilant in our watch of recent issues and the risk of contagion from a rolling credit event. Client portfolios are invested conservatively and quality focused.

Please do not hesitate to contact us if you have questions or concerns. We welcome the opportunity to talk with you!

Vision is Foresight

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Special Market Alert: Stocks Punished on Greek Contagion

posted 05.07.2010 at 3:25 p.m. by steve

Greek contagion fears spread yesterday (May 6) as financial market vigilantes concluded it time to address the issue of Europe failing to adequately address Greek debt and the countrys austerity plans. When governments and authorities fail to address critical issues either timely or correctly, financial market vigilantes often take matters into their own hands. The result, often lasting several days or weeks, is nerve-racking volatility and drawdown of asset values. At one point yesterday, a trading system glitch exasperated fears and likely led to a more severe decline than would have been otherwise.

Portfolios experienced drawdown, but not market-level declines. A quality focus and diversification help a lot. We do expect that as a result of the European issues

*The Fed will keep fed funds rates lower longer

*Lower interest rates and energy prices should help support the US consumer and economy

*Interest in gold will mount

*AND, current events will present another buying opportunity for quality.

Please read the full Special Commentary: Yesterday, And Tomorrow: What happens when debt is too much.

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Obama Signs Healthcare Reform Bill into Law - Investment Implications

posted 03.23.2010 at 10:18 a.m. by steve

After a year of polarized and heated debate, President Obama has managed to pass a bill on healthcare reform. The bill intends to expand healthcare coverage to some 30 million additional Americans who are currently without access and has been projected by the Congressional Budget Office (CBO) to reduce the federal deficit by billions over the next decade. However, expanding coverage while reducing the deficit can only mean one thing: higher and/or new taxes are needed. Indeed, the new healthcare reform bill does levy some new taxes on higher income earners in the form of an income and investment surtax.

JPMorgan has published a brief Market Bulletin to address the investment implications of this new reform. The article does a good job of removing political views and summarizes the facts as they relate to your investments. If interested, we encourage you to read the short article by clicking here: JPMORGAN HEALTHCARE BULLETIN.

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Thoughts on Madoff Investment Securities, LLC

posted 12.18.2008 at 2:40 p.m. by steve

Trust. It is the foundation for which the entire world and capital markets function. It is the core of the investment management business that takes years to build. Without trust, the capital markets would cease to function. Yet, every few years we hear of a new and unique situation of fraud or deceit where the foundation of trust is shaken.

In response to the recent news surrounding Madoff Investment Securities, we have taken a moment to write a piece responding to questions circulating in client and investor minds. That entire piece can be found by clicking here: Thoughts on Madoff Investment Securities, LLC.

*Nvest Wealth Strategies has never used investments (funds or other investment vehicles) managed or associated with Madoff Investment Securities, LLC.

*Client accounts are held by a third-party custodian, Charles Schwab & Co.

*Due dilligence, initial and ongoing, is thorough for your peace of mind.

We value the trust you have placed in us, and continue working to earn that trust each and every day. Thank you for your continued support!

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Mutating Financial Crisis

posted 09.26.2008 at 10:21 a.m. by bill

The financial crisis is mutating. It is not only pulling in all types of financial institutions (banks, brokerage firms, insurance companies, and Government Sponsored Entities (GSE)), but appears to be affecting some parts of the non-financial economy. The US economy has not to this point entered a recession, but the lack of money flow via borrowing from financial institutions will most likely cause the economy to slip into a mild recession. And, the recovery from a recession may be slow.

The mutating financial crisis, that has swallowed many high profile financial and brokerage firms, has required the Fed, Treasury and government to take drastic action. The US financial markets are going through the greatest peril in 60 or 80 years. As black as the current moment seems, the $700 billion bailout IS the action needed to remove toxic loans from financial institutions balance sheets and allow them to survive.

We are watching closely; we are monitoring closely; we are talking to many highly respected fund managers and strategists to gather current insights. We believe a terrible peril will be averted.

Please click here to read the full alert

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Finally, All She Wrote!!!

posted 09.16.2008 at 11:49 a.m. by steve

The US Treasury is saying it has had enough of risk taking brokerage firms who didnt care, except for their own wallets. And, they are not going to bail out these Wall Street cats; they can figure out how to get out of their problems without tax-payer assistance. It does appear the financial crisis, which has been in slow motion, may now have seen hurricane Ike.

This is not to say the Treasury or Fed wants the financial system to fail, or that they want housing woes to wipe out hard-working, taxpaying citizens. But talks with Lehman Brothers over the weekend provided no assistance, and the end result was Lehman filing for Chapter 11 bankruptcy protection. And, Merrill Lynch will now be part of Bank of America. All of this comes one week after the Treasury placed Freddie Mac and Fannie Mae into conservatorship. Thus, not all financial institutions are too big to fail.

This will have meaningful consequences and implications for the future of the financial services marketplace. Of key importance to clients is that Schwab has never been like the Merrill Lynchs, Goldman Sachs, Lehman Brothers or others that developed securities and created all types of securities transactions to fill the appetite of investors of all sorts. Schwab does not have financial ties to Legman like some others; it is independent. Watching Schwab stock should provide witness to the fact that the markets do not see worrisome connections. You should not be wary of your accounts’ safety at Schwab.

Next, it is most difficult for us to make predictions about what the markets will be like tomorrow, the next few days or weeks. We should expect further turmoil in the financial markets and emotional selling can take prices of some securities to obscene levels. When the markets stabilize, which they will, and cooler heads prevail, investors (not speculators) will advance stock prices. The financial dominoes are bigger and closer together now. In the short term, confidence is lacking (by investors and between financial institutions as they avoid making loans of all kinds), but confidence will return.

We are holding cash, since late last year (and wish percentages were even greater); in addition most client portfolios also own bonds. Thus, stock market exposure is lighter than when we are fully invested. We expect to stay conservative for a while longer. We dont like to time the markets, rather we like to be long-term investors. But like you, we have not witnessed this type of financial institution turmoil before. We need to keep in mind the Fed, Treasury and government has instituted enormous policy response. Policy response works with a lag. And we expect more policy responses are likely.

If you harbor undue worries, please let us hear from you via phone call or email. We want to know how you are doing.

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JPMorgan Chase Agrees to buy Bear Stearns

posted 03.17.2008 at 12:03 p.m. by bill

JPMorgan Chase has agreed to buy rival investment bank Bear Stearns for $2.00 per share (Bear’s stock traded as high as $160.00 just 15 months ago).

Please click here for a brief piece related to that event and the markets.

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Fear or Opportunity

posted 01.22.2008 at 2:52 p.m. by steve

What a start to the week…

In light of the market since the beginning of the year, and with the Federal Reserve’s unprecedented 75bp inter-meeting Fed funds rate cut this morning in response, Bill took some time today to organize some thoughts in the form of a slideshow (attached). If you find yourself being spooked, this piece (CLICK HERE) may provide some help.

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Long Term is a Green Banana

posted 11.27.2007 at 3:04 p.m. by steve

Lately we have been pondering much amidst the market turmoil in the month of November. It is clear that emotions are running high for investors everywhere, and we would be lying if I said we are not concerned as well. The financial engineers of Wall Street and their creative financing structures are denting earnings, credit availability and investor sentiment.

What does it mean to be a long term investor???

What typically happens following a bad month in the stock market???

Why not just take a step back and sit this market out for a while???

Those are the types of questions that come to mind when investors become emotional. However, knowledge from the studies of behavioral finance has proven time and again that if you can eliminate emotion from investing, you will succeed.

Attached you will find our thoughts on these questions in a piece titled, “ Long-Term is a Green Banana." Please don’t hesitate to give us a call if you have any questions, or would like to schedule a time to review your portfolios.

“Troubles never seem bigger than the present, even though those of yesterday were just as big.”

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