WrapManager's Wealth Management Blog

Recent market volatility has likely raised fresh doubts with some investors about where the market is headed from here. The S&P 500 and the Dow Jones both fell over 10% in just a few trading days late in August,1 and concerning headlines about growth in China have persisted over the last few weeks (though the market has recovered a bit over that time). But don’t let the volatility lure you away from your long-term investment strategy. As investors, it’s tempting to experience declines (especially when they happen quickly like in August), and to want to react—to take your portfolio more defensive or to sell out of stocks altogether. It’s human nature, but it can also hurt more than it helps. The repercussions of ‘reacting’ can indeed have a significant impact on the investment returns you generate over time. Take a moment to study the chart below. As you can see, with $10,000 invested over 20 years, you would have over $65,000 had you stayed invested even throughout two bear markets. But if you missed just the 10 best days over that time, you would have an eyebrow-raising $30,000 less. That’s more than half of what you could have earned, in just 10 days! Miss the 40 best days, and you actually end up losing money. [+] Read More

ClearBridge Investments, a Legg Mason company, provides their Q3 commentary with discussion of the challenges and opportunities that exist within such a volatile market. "Market Commentary “Nothing any good isn’t hard.” – F. Scott Fitzgerald Memories of painful experiences are often a critical and adaptive part of living, in that painful memories can keep you out of harm’s way by minimizing repeat mistakes. The challenge, however, is that memories are highly subjective, and with the passage of time you often forget how intense something felt at the time. In the realm of physical pain, my biggest outlet for stress is training and competing in triathlons with my wife and several colleagues from ClearBridge. They are all better than me, which is painful enough, but I often don’t have enough time to fully prepare for the longer events. This inevitably leads me to swear off competing again, until I ultimately find myself standing in a cold body of water at the beginning of another grueling physical experience. In all seriousness, I love competing, and the rewards of doing so from a health and emotional perspective far outweigh short bouts of physical pain that are soon enough forgotten. [+] Read More

While market concerns had investors scrambling for the exists, Cambiar Investors took advantage of the market weakness in Q3 to deploy capital into a number of new investments. Read their Q3 2015 commentary below. "Market Review After fairly muted performance for the first half of 2015, global equities sold off in the third quarter. In contrast to prior pullbacks that were often met with buyers stepping in to buy the dips, investor sentiment towards stocks deteriorated considerably in the quarter. A popular Wall Street phrase is “stocks climb a wall of worry” – referring to the tendency for equity markets to overcome a host of negative factors and move higher. Yet is seems the wall got too high in the quarter. Global growth fears (led by China), increasing uncertainty of U.S. monetary policy, and continued pressure in Emerging Markets were just some of the concerns that had investors scrambling for the exits. While all of these factors warrant careful consideration, it is Cambiar’s view that the correction in the quarter was of the “shoot first/ask questions later” variety, vs. fundamentally driven. Given our value orientation, such reflexive selling can provide attractive entry points; to that extent, Cambiar used the market weakness to deploy capital into a number of new investments during the quarter. [+] Read More

2015 has been a challenging year so far for many asset classes, but Emerging Markets and Commodities are two categories in particular that have felt pronounced downward pressure throughout. Emerging Markets (as measured by the iShares Emerging Markets Index ETF, ticker EEM) are down around 10% year-to-date through October 20,1 and commodities have fared even worse—in the third quarter prices cratered, with Brent Crude Oil and West Texas Intermediate down -23.6% and -23.7%, respectively, and with copper -10.7%, gold -5%, and silver -7.5% all losing ground as well.2 The questions on many investors’ minds are: is the slump over? Are these attractive levels to buy-in to Emerging Markets and commodities? [+] Read More

Federated Investor's Q3 international strategic value dividend account commentary reivews the affect of August volatility and the ability of their strategy to provide a substantially higher-than-market yield and long-term dividend growth. "Market Overview" Equity markets pulled off their August low but were still down on the month, closing out their worst quarter in four years as investor fears over China, lower oil and a potential global slowdown outweighed generally better economic data at home.The Federal Reserve added to the uncertainty and volatility, choosing to put off liftoff at its September meeting, rattling the markets even though futures had put the odds of a move at well below even. [+] Read More

Eagle Asset Management's Richard Skeppstrom reviews the Fed's interest rate decision and discusses current equity markets in this month's market perspective. "Interest-rate constipation U.S. economic growth was nearly 4 percent in the second quarter and the U.S. Federal Reserve decided to leave rates at 0. It was rumored to be a close call but labor conditions aren’t perfect: too many aren’t looking for work, international markets are unsettled and infl ation remains just below target. I didn’t believe 0.25 percent made any difference anyway but equities weren’t thrilled. You might think that after watching these things for 20-some years, I’d know if the news were good or bad; however, I’m not even sure what the news was in this case. Some countries aren’t well-run? Some people would rather not work? In any case, the Fed still believes it imprudent to pay interest on savings. Congrats to the borrowers. [+] Read More

For many people approaching retirement age, there may be trepidation about how to properly plan for your retirement lifestyle. Unfortunately, without having a trusted advisor along for the ride, the journey toward retirement can feel a lot like planning a trip to the moon without an engineer. There are many unknown aspects about what will happen once you actually retire. How will your new-found freedom affect your spending habits? What will be the state of the economy at that point in time? Will you stay where you are, or travel, or permanently relocate? Hire an Advisor A good first step to successful retirement lifestyle planning is to find a financial advisor that can help to answer questions you have about how your investments can work for you as you approach retirement and beyond. As your employment situation changes, your income will fluctuate and the tax laws regarding your income will also likely change. A knowledgeable advisor will be able to tell you which changes will directly impact you based on your current situation, in conjunction with your CPA, can help formulate a plan to take advantage of the best tax breaks and plan investments accordingly. [+] Read More

National politics are set to take center stage of media coverage, gripping the minds and TV sets of many American households. With political TV ad spending expected to eclipse $4.4 billion in this cycle,1 however, and with politicians on both sides jockeying early for a chance to secure the nomination, it feels like the elections are already upon us. With over a year to go for the presidential election, we’d advise you to buckle up – because it’s only going to get more intense from here. To note, WrapManager is not taking a political stance with regard to elections – whether Democrats or Republicans control the White House and/or Congress is up to the voters. Our concern is the market and the economy, which while affected by politics, is not wholly controlled by it – there are plenty of other variables to consider. In the past, election outcomes have formed patterns in the stock market, which may offer us clues for what to expect as the race takes shape. We’ll take a look at a few of those below. [+] Read More

Quizmaster Doug Hutchinson has come up with another great quiz that explores the effect of harvesting losses. Let’s see what the math has to say. Good luck! First, a definition of tax loss harvesting. Tax Loss Harvesting is the practice of selling a security that has experienced a loss. By realizing, or "harvesting" a loss, investors are able to offset taxes on gains. The sold security may be held in cash or replaced by a similar one (keeping in mind wash sale rules), to help maintain the optimal asset allocation. [+] Read More