Investment hypotheticals are imaginary scenarios of portfolio returns. Summaries of theoretical past or future circumstances, they may serve as powerful tools for instruction, in particular we think when the goal is as much to convey how the investment math works as it is to convey the results of that math. Helping folks think through the arithmetic of retirement planning is one such effort for which we think examples of and discussions over such what-ifs can be truly impactful. Starting with the “accumulation” phase of investment, this month’s commentary is the first in a three-part series we’ll pen to illustrate that math.

Download PDF: 1219 SAM Commentary

Depending on how one defines the group, Value stocks have underperformed Growth stocks for a decade or longer. This potential for long periods of underperformance is one of the primary reasons that we “tilt” our portfolios toward Value, while also incorporating multiple factors into the stock selection process. Value’s underperformance, nonetheless, does not dampen our preference for increased exposure to less-expensive stocks. The underperformance has coincided with an expanding valuation gap between Value and Growth stocks. We find that trend bolsters both the premise of our preference for Value and our belief that forward returns may benefit from favoritism toward stocks that have been left behind in this latest market surge.

Download PDF: 1119 SAM Commentary

The third quarter was tense in manners similar to the thrilling, but otherwise inconsequential subplots forced into the hurtling-toward-a-super-bad-outcome narrative of a typical disaster movie. This year’s trade scrap is just one round of many past and likely future struggles that the U.S. will experience as it seeks to come to terms with an ever-surging China. It seems obvious from the market data that investors have eyed the contest closely. But global growth was slowing anyway. As nations seek to deal with a range of long-term growth-sapping pressures, the third quarter presented a fresh reminder to stay observant of the underlying plot, even as exciting side stories may draw attention elsewhere. In the same way, we wish to remind readers that the “plot” on which to focus when it comes to investing revolves around short- and long-term financial goals. Best to leave the otherwise weakly relevant subplots on the cutting room floor.

Download PDF: Q319 SAM Market Review

Seems like each day brings a new call that a recession is right around the corner. Or, if not right around the corner, somewhere in the nearer-term future. If not so soon, then likely at some point over the next few years. Or perhaps later. Of course, one of those statements must be true. As always, the timing of that recession is up to the universe to decide. And where timing is considered, we generally caution against shifting target portfolio exposures in light of any “pending” recession. We find the most defensible approach is one that sticks to target allocation that accommodates comfort with the potential market-related ramifications of macroeconomic downturns, while remaining focused on longer-term plans.

Download PDF: 1019 SAM Commentary

Normally we’re not big fans of the phrase, as it’s often used reflexively rather than with specific intent. On the contrary, we reference relativity often and with specific intent. For example, we regularly remind readers that expectations for greater relative return should be accompanied by expectations for greater risk. This month, we offer perspective on the historical relative returns of a range of mixtures of equity and fixed income using the benchmarks we utilize for our portfolios as the basis for comparisons. The goal of the review is to further support the process of defining client comfort with exposure to market risk and to provide a means to establish reasonable expectations for short- and long-term outcomes.

Download PDF: 0919 SAM Commentary

Wasn’t so long ago that we were applauding more generous yields among our fixed income exposures for the greater income over the longer term that they may provide. This despite the nearer term drag from the impact that rising rates had on bond prices, the movement of the latter being inverse to that of the former. So much for all that. A conspiracy of waning global growth, declining inflation expectations, rising geo-trade tensions and rather more perilous political turns of tone have seen interest rates near world-round sink on growing pessimism and uncertainty. Investors should be careful, we think, to respond by creeping up the risk curve, as bangs-for-buck remain historically weak among most of the riskier income-focused investment.

Download PDF: 0819 SAM Commentary

Yet another quarter has gone by during which, were it not for the actions—or, rather more appropriately, expectations of forthcoming actions—by the Federal Reserve, equity markets otherwise might have turned in a rather more sober tally. With earnings growth waning against a backdrop of elevated valuations, perhaps too much hope rests on a nearer-term future over which the Fed may be able to exert only modest influence. As we wonder which wags which, tail or dog, we remain focused on providing broad means for investors to work with advisors to address any shift in tolerance for the elevated risk and uncertainty of it all.

Download PDF: Q219 SAM Market Review

In last month’s commentary, we sought to support our desire to maintain international equity exposures with an argument in favor of the greater diversification they may provide. This month we want to offer a bit of a boost to the idea using a review that should be familiar. The rather subdued relative performance of international equities has left their valuations generally lower, versus their own historical levels and relative to the U.S. market. While those gaps do not suggest immediate reward is due, in our view they bolster the idea that a portfolio inclusive of global stocks may find relative favor over the longer-term.

Download PDF: 0719 SAM Commentary

Humans can be faulted for behaviors of all sorts, and our penchants when investing are not immune to such criticism. One of the more powerful biases is our tendency to see the recent past as a fuller record than it is. As went the past few years, so must have been the past few decades, no? Not invariably, perhaps not even often so. The outperformance of the U.S. equity market seems to have many regretting international stock exposure. We find such thinking faulty both for the potential additional diversification a global portfolio presents, as well as what we may expect to prove more rewarding potential longer-term return.

Download PDF: 0619 SAM Commentary

Our industry spends a great deal of time thinking about where a portfolio is invested and how those investments perform over time. Perhaps not enough time is spent discussing the force we think most impactful with regard to meeting long-term financial goals: savings. After all, without savings, there’s no portfolio. And no manner of fanciful investment scenario can save a financial plan that focuses too little on dollars put away for far-in-the-future spending.

Download PDF: 0519 SAM Commentary