The Rock Point Advisors Blog Series


Quarterly Commentary

4Q 2017

2017 was a year that started with high hopes, big concerns, and many questions. Might the incoming president’s agenda of lighter regulation, a push for infrastructure investment and tax reform boost the economy and markets? Could protectionist trade rhetoric escalate into measures that would depress business prospects at home and abroad? Consideration of an uncertain future starts with having a grasp on where things stand today. Here’s our list of questions from a year ago, with our updates:

2017 Tax Cuts and Jobs Act

December 21, 2017

Congress has approved the 2017 Tax Cuts and Jobs Act. Although this measure has been taking shape for several years, the ongoing political circus and rush to get this bill done have distracted both citizens and leaders from fully understanding this important legislation.

Why own bank stocks now?

November 11, 2017

A decade removed from crisis, bank stocks are only now regaining the confidence of investors. A series of satisfactory regulatory stress tests are evidence that most necessary repairs have been made, and many banks are now rewarding shareholders with increased dividends and buybacks.

Quarterly Commentary

3Q 2017

Our summer in Vermont was pleasant enough, though it started wet and ended hot. There was little wind throughout (noticed by the sailors in the office). Markets were much the same – we can’t recall so many days with so little movement. But the result was agreeable.

Quarterly Commentary

2Q 2017

US equities reached new highs during the second quarter. At eight years and counting, this bull market is the second longest on record. Indeed, over the past twelve months, an aura of inevitability seems to have enveloped the US stock market as dips have been met with renewed buying. The volatility index (VIX), a measure of investor expectations that stocks might move quickly up or down, has been hovering at the lowest levels witnessed over the past twenty years. Stock markets around the globe have remained firm as well, even as they contend with heightened political uncertainty and disturbing geopolitical events.

Quarterly Commentary

1Q 2017

With tongue firmly in cheek, we propose that our President’s greatest achievement so far is to lend his name to the stock market’s post-election advance. Trump Bump or Trump Rally – US stocks gained more than 11% from the election through the beginning of March – remarkably without a single daily decline of 1% or more, further evidence that political uncertainty does not necessarily trigger market turmoil.

Steering Through Uncertainty

March 1, 2017

Media coverage has been focused entirely on our new president. Like it or not, we’re probably in for more of the same “Trump 24-7.” All the while, the stock market has been notching all-time highs.

The post-election returns are impressive, but many find the current situation tenuous. Here is our perspective on questions we are receiving:

Quarterly Commentary

4Q 2016

How will we remember 2016? The rise of populist politics as exemplified by Brexit and Trump? The long-awaited turn to higher interest rates? Or, perhaps just as a year that confounded expectations in so many ways?

The Trump Rally

December 16, 2016

Clinton wasn’t the only loser in November. Conventional wisdom also took a beating, as the market plunge expected in the wake of a Trump victory failed to materialize. Instead we have had a sharp advance that persists a month later. What happened? What do we make of this rally?

Looking Past Election Day

November 8, 2016

The current election has revealed deep division and mistrust in our country, but it is not the first polarizing presidential contest. The election of 1800, pitting incumbent John Adams against Thomas Jefferson, was an emotional and hard-fought campaign. Each side believed that victory by the other would ruin the nation.

Quarterly Commentary

3Q 2016

The world seems to be at odds with itself. US stocks are near all-time highs, yet economic growth is soft and US corporate profits have stagnated. The Fed is poised to raise interest rates while central banks elsewhere take measures to support their economies. Investors see little upside in bonds, but their pursuit of quality dividend-paying stocks has led to stretched valuations for many popular stocks and funds. Then there are the elections – where for many, the preferred choice seems to be “none of the above.”

Dividend Stocks – Getting Pricey?

September 21, 2016

The quest for yield has elevated the share prices of many large, dividend-paying US stocks relative to the rest of the market. Look no further than the S&P Dividend Aristocrat index that has outperformed the broader S&P by a considerable 10% year-to-date. Should the mere presence of a large or growing dividend be a determining factor in choosing stocks or funds? History says no but today’s investors say yes. The reach for yield is understandable – baby boomers entering retirement have a hole to fill. In the long run, however, investor satisfaction will be determined by total return, including capital appreciation or depreciation. The current valuations of many dividend darlings should give discerning investors pause.

Quarterly Commentary

2Q 2016

Resilient in the face of uncertainty would be an apt description for financial markets in 2016. We entered the second quarter marveling at how quickly US stocks had rebounded from the alarming January/February plunge… and hoping for more upside. Concerns about US and global economic growth were receding. Chinese authorities had asserted control over the value of their currency. Oil prices were recovering.

Infrastructure Spending – In the Works?

June 3, 2016

Switzerland is celebrating the opening of the world’s biggest rail tunnel, a project through which 65 passenger trains and 260 freight trains will pass each day, cutting travel times (and air pollution) as people and goods move between the north and south of Europe. Back at home, our infrastructure is crumbling. Or is it? The answer depends on what you mean by infrastructure. Internet download speeds and cell phone coverage have improved significantly, supported by an estimated 113,000 miles of long-haul fire-optic cable and 300,000 cell phone towers in the US. We’re focused on more traditional infrastructure such as airports, waterways, rail, roads, and tunnels – like the Hudson River rail tunnel project infamously shelved in 2010.

How Does One Guide a Retirement Plan Through a Down Market?

March 24, 2016

The bears among us are now emerging from hibernation to discover the S&P 500 has turned green just as spring arrives. Should the rest of the year progress at the same rate, the result would be a modest 4% full-year return. That would be a disappointment in most years, but 2016 has not started like most, as those not napping through the winter can attest.

What is Happening to Oil and the Markets?

February 19, 2016

The stock market has descended into correction territory as 2016 has unfolded. What role are lower oil prices playing? If it’s not all about oil, then what else is behind the market’s stress?

Here is our take on oil and the markets, and how we are reacting to the sell-off. Whatever the causes, we agree that times like these feel awful. The best defensive strategy is to make sure that your portfolio is invested in a manner consistent with your needs and goals.

Solar, Anyone?

December 23, 2015

Winter solstice is upon us and sunlight is scarce in Vermont. Even so, the recent Paris climate change accord and the even more recent extension of US renewable energy tax credits have us thinking about solar, for both rooftops and stock portfolios.

Social Security: What’s New?

November 30, 2015

Congress slipped a bit of Social Security reform into the recent budget deal. Plans to curtail a pair of Social Security claiming strategies didn’t make headlines, perhaps because neither is widely understood nor used. If you are contemplating your own approach, are married, and will reach 62 by the end of this year, then you should learn more about what is being phased out (see Goodbye to Extra Benefits for Married Couples).

The VW Emissions Scandal: A Failure of ESG Investing?

October 30, 2015

Until five weeks ago, Volkswagen appeared to be reaching its well-publicized goal of becoming the world’s leading automaker, both economically and ecologically. Sales figures for the first half of 2015 showed VW edging past Toyota into the global lead. The Dow Jones Sustainability Index released in early September ranked VW number one among the world’s car companies, with full marks awarded for codes of conduct, compliance and anti-corruption as well as innovation management and climate strategy. On September 9, VW’s CEO basked in the award’s glow, proclaiming in a press release that “this distinction is a great success for the entire team. It confirms that the Volkswagen Group is well on the way to establishing itself long term as the world’s most sustainable automaker.” Many ESG-guided portfolios held full positions in VW shares.

529 Plans – What’s to Know Beyond the Basics?

September 9, 2015

Staying focused on long-term financial goals is key to investing success, especially when we are weathering periods of market volatility like the present. If you are in a position to help your children or grandchildren pay for college or graduate school, or if you can anticipate a future day when a family member will benefit from your foresight, it is always a good time to consider a 529.

Market Selloff – Keep Calm and Carry On?

August 25, 2015

Global financial markets are under pressure. As we write this, US stock indices have retreated approximately 11% from highs reached this spring and summer. Foreign benchmarks are down more, led by China.

While no two situations are the same, history provides critical perspective. Long periods of rising share prices are regularly interrupted by corrections such as the one currently unfolding. In fact, it had been four years since we had seen a 10% or larger decline. The onset of corrections can be stressful. Trying to anticipate these events is a losing proposition, but being prepared for them is a necessity.

Cyber Crime – What Precautions Protect my Savings?

June 18, 2015

It happened more or less like this. The email arrived at Rock Point Advisors’ office very late on a Friday afternoon from Abby*, a longstanding client, or so it appeared. It was a continuation of a prior email chain — we instantly recognized our exchange about Abby’s IRA from a few weeks earlier. “Abby” seemed like her usual self, offering the team warm greetings, before requesting a wire transfer from her account to a “luxury car dealer” a dozen states away.

Higher Interest Rates – a Big Deal?

June 12, 2015

Economists agree that the Federal Reserve is likely to “raise interest rates” sometime later this year. Rate hikes are neither categorically good nor bad – what they mean can be complicated. Rates were last raised long enough ago (2006) that many of us have forgotten how it looks and what it means. Here is a quick primer on the topic, an outline of how we think about it while managing portfolios, and a few ideas you can consider to prepare your personal finances.

Could Retirement Planning Really be This Simple?

May 14, 2015

Hardly a week goes by that we don’t encounter another article examining the 4% rule, a guideline for sustainable spending during retirement. Joining the parade, last Saturday’s New York Times ran an article titled “New Math for Retirees and the 4% Rule.” A sidebar warned that a 2.85% withdrawal rate might actually be a “safer bet” for those entering retirement today.

Securities Class Action Lawsuits – What’s Required of me?

March 11, 2015

As an investor, you are likely at some point to discover a fattish envelope in your mailbox announcing a class action lawsuit against a company. “What am I supposed to do with this?” you may ask. The quick answer is that Rock Point Advisors has its clients covered.

$33 to Fill ‘er up – We Should be Happy, Right?

February 4, 2015

Gas prices in our part of Vermont remain stubbornly above the national average, but we figure that we’re still on track to spend $1,000 less on gasoline per car than we did last year. That’ll buy us each something on the order of 175 pints of Ben and Jerry’s ice cream, 10 days of skiing at Stowe or 2,000 K-cups to brew in our Keurig machines – darn nice whatever your preference!

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