WrapManager's Wealth Management Blog

Richard Skeppstrom, of Eagle Asset Management's Strategic Return Portfolio, analyzes recent market volatility in Eagle's November Market Perspective. "As the third quarter came to a close, equity markets were a stumble away from panic. Bankruptcy concerns were playing havoc in the commodity space while technicians nervously watched for a Dow sell signal. If the Dow had closed below the August trough of 15666: a blood bath. I wrote that I was comfortable with my equity allocation and would just wait and see, ignoble action possibly resembling chicken excrement. Of course, my reluctance to do anything was a reliable buy signal. Don Hayes, the longstanding strategist at fondly remembered Wheat First Securities, used to say the markets will do whatever they can to confound the most. The rebound this month certainly qualifies. Not only has the market staged a striking rebound, but also sector leadership completely reversed. Energy and commodities – hated a few weeks ago – have led while healthcare has lagged. [+] Read More

Investor concerns about another government shutdown were eased in late October, when Congressional leaders passed a bipartisan agreement that will provide relief from sequester cuts and avoid unnecessary debt defaults1 (yes, we just wrote the words ‘bipartisan’ and ‘agreement’ in the same sentence). A closer look at the budget agreement, however, revealed some changes to Social Security rules that will close the window – at least for now - on some unique Social Security Retirement Benefit ‘strategies’ that we’ve written about before. The End of the “File and Suspend” Strategy The first is the File and Suspend Strategy. Before this budget agreement, the file and suspend option allowed one person in a married couple to file for their benefit (thereby allowing the spouse to claim their benefit) but then immediately suspend it – allowing that future benefit to increase. You file, your spouse claims, then you suspend. [+] Read More

Quizmaster Doug Hutchinson has come up with another great quiz that explores the compounding effect of leveraged ETFs. Let’s see what the math has to say. [+] Read More

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

There are literally thousands of money managers out there. If you’re trying to figure out which one (or ones) is right for you to help you reach your investment goals, you may feel overwhelmed by all the options. Where do you begin researching and what criteria do you consider? We’d like to help. Each quarter, Wrap Manager’s Investment Policy Committee (IPC) compiles a list of top money manager picks in order to help investors discover and evaluate money manager strategies. These encompass a wide range of asset classes and investment disciplines. [+] Read More