Bull, Bear and Upside-Down Markets

By Jim Buckham CFA, Portfolio Manager

Bull and bear stock markets have been around since the beginning of stock indices in 1896. Currently, we are in the longest bull market for stocks on record. What people forget is bear markets can last a long time or they can wipe out significant amounts of wealth quickly. This paper looks at severe bear markets throughout history. In addition, it looks at the current state of the global economy, central banks’ reactions to slow growth, and what this may tell us about future stock performance.

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Sequence-of-Returns Risk

By Michael Foley, Vice President, Private Client Group

At Wellesley Asset Management, we have found that investing in convertible bonds issued by companies with high-quality balance sheets, purchased near their par value, and with a properly structured maturity schedule may assist in managing sequence-of-return risk.

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A Genius, an Investment Guru, and a Golfer Walk into a Par

By Michael Foley, Vice President, Private Client Group

Take a look at the two investments below. Which would you prefer? The simple average of returns in Investment A would be 10%% (29+20-30+21=40/4=10). The simple average of returns in Investment B would be 10% (19+11-4*14=40/4=10). Unfortunately, simple averaging does not paint a clear picture nor is it appropriate to use with market returns. Annualized averaging is a far more accurate gauge due to the concept of compounding.

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What Keeps Me Up at Night

By Jim Buckham CFA, Portfolio Manager

As a follower of the markets, I am often asked “What keeps you up at night”? This is another way of asking what concerns me about the current state of the capital markets. I would like to share some of my observations about the stock and bond markets and why I feel that, going forward, investors should proceed with caution.

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