A quarterly review by Crestwood Advisors designed to keep you informed of the latest economic and market changes.
- Crestwood Advisors Group announces merger with Catamount Wealth Management and expands into Westport, CT
Boston, MA, July 1, 2019 – Crestwood Advisors Group LLC is pleased to announce the merger with Catamount Wealth Management. As a result of this merger, Crestwood is expanding into Westport, CT and will now have three offices and 35 professionals managing approximately $3.0 billion in assets on behalf of high net worth individuals and families.
Catamount Wealth Management (Catamount) was founded by Louis Albanese in 2003 and, together with Laurie Stefanowicz, manage about $300 million for high net worth individuals and families. The entire Catamount team will continue to operate from their existing offices in Westport, CT.
“We have enjoyed getting to know the people of Crestwood for well over a year and believe combining efforts with the talented professionals in Boston will enhance our strengths, deepen our bench and provide the best outcomes for clients” said Louis Albanese. “Having greater scale is increasingly important for clients. Partnering with Crestwood increases our resources and broadens our expertise to provide outstanding services to our clients.” added Laurie Stefanowicz.
Michael Eckton, Crestwood’s CEO & Managing Partner said “We are thrilled to welcome the Catamount team. Collectively they have such deep and broad experience working with nearly identical clients and we are eager to collaborate with them for the greater benefit of all our clients.” Eckton added, “Our new colleagues in Westport share our commitment to deliver highly personal, robust wealth management solutions and adding this talented team to the Crestwood family deepens our already significant client presence in Fairfield County.”
For more information, please contact: Michael A. Eckton, CFA, CEO & Managing Partner
firstname.lastname@example.org or 617-523-8880.
About Crestwood Advisors Group LLC
Crestwood Advisors Group LLC is an independent, fee-only, wealth management firm with approximately $3.0 billion in assets under management. Founded in 2003, Crestwood Advisors Group provides investment management with financial planning strategies to help high net worth individuals and families identity and prioritize their goals and build sustainable wealth so that they may enjoy more financially secure and purposeful lives.
- Tariff Man
U.S. trade conflicts have entered a new phase. President Trump has demonstrated his tariff threats are real, individual companies can be blacklisted and his rationale for new tariffs can extend beyond trade balances to include immigration. This new phase has alarmed investors, forced economists to reduce growth estimates and precipitated a 5% selloff in global stock markets during May.
President Trump enacted the tariffs in an effort to bring jobs back to the U.S. and to ensure fair trade. We agree there is a lot of room to improve trade in the U.S., to make it more fair and better support displaced workers. However, as investors, Crestwood believes tariffs are bad policy and will hurt U.S. GDP growth as they disrupt companies’ supply chains, weaken companies’ margins and create uncertainty.
- Crestwood Advisors Group announces merger with MacGuire, Cheswick & Tuttle Investment Counsel and expands into Darien, CT
Boston, MA, April 1, 2019 – Crestwood Advisors Group LLC is pleased to announce the merger with MacGuire, Cheswick & Tuttle Investment Counsel LLC. As a result of this merger, Crestwood expands into Darien, CT and will have two offices and 30 professionals managing approximately $2.5 billion in assets under management primarily on behalf of high net worth individuals and families.
MacGuire, Cheswick & Tuttle (MCT), founded in 2009 through the combination of K.A. MacGuire & Associates and the former Cheswick Investment Co. Inc., manages over $500 million for private clients. David P. Tuttle, Kevin A. MacGuire and Susan Cheswick Brewer, the three founders and senior investment professionals at MCT representing over 85 years of combined experience, will join Crestwood Advisors as Managing Directors and Portfolio Managers. The entire MCT team will continue to operate from their existing offices in Darien, CT. (more…)
- Importance of Time and Diversification
This past December, stock prices fell -14%, bottoming out on 12/24/18 with a one-day loss of -2.7%. Watching your investments decline close to 15% in 16 days is scary, disconcerting and discouraging. With an aging bull market and increasing volatility, why stay invested?
In order to add value by market timing (owning more stocks in good times and selling stocks when the outlook is gloomy), one needs to anticipate market’s ups and downs. Every year, well respected market professionals try to forecast the annual return for the S&P 500 index. Below, we’ve compared the expert’s average annual return expectation versus the actual market returns over time. (more…)
- Trade War – a Game of Chicken
In 1934 Congress passed the Reciprocal Tariff Act which essentially ceded to the President authority to negotiate tariffs with other countries. This bill was passed as the U.S. was exiting the Great Depression and Congress looked to reverse the disastrous Smoot-Hawley Tariff bill of 1930. (Further background on the Smoot-Hawley bill can be found in an earlier write-up here.) When drafting the Smoot-Hawley Tariff bill, the scope and size of the bill increased dramatically as many Congressmen added provisions to protect businesses in their home states. By passing the Reciprocal Tariff Act of 1934, Congress essentially acknowledged they were not capable of containing special interests and empowered the President with authority over tariffs.
President Trump has wielded these trade powers in a new and unpredictable manner. Investors are concerned that a trade war could bring higher inflation and a global economic slowdown. The trade issues began in March when President Trump announced tariffs on steel and aluminum imports with some countries like Mexico and Canada being exempted. The tariffs affected approximately $40 billion in imported goods. The Federal Reserve of Dallas estimates these tariffs could lower U.S. GDP by an inconsequential 0.24% as steel and aluminum imports account for a relatively small piece of the U.S. economy. (more…)
- Trumps Tariffs
On March 1st, 2018 President Trump announced his intention to impose significant tariffs on steel and aluminum imports. The announcement sent stock and bond prices falling, stoking fears of higher prices and slower economic growth. Protecting domestic industries like steel and aluminum may have raw appeal, but tariffs are flawed in theory and have a history of hurting economic growth. History shows a link between tariffs and populism which last flourished in the 1930’s. President Trump’s proposed tariffs threaten the post WWII global trade order and stock and bond markets are now paying attention.
Tariffs are bad policy
Basic economics instructs that tariffs benefit a select few producers and harm consumers through higher prices as they reduce competition and allow less efficient producers to continue to operate. In 1776, Adam Smith wrote of comparative advantage stating that countries should focus on their low cost production and trade for goods where their costs of production are relatively high. In general, society benefits from trade as wealth rises everywhere. (more…)
- Volatility is Back!
Stock markets around the globe have sold off over the past few trading days, giving back most of their gains for 2018. Notably, the S&P 500 was down 4.1% yesterday and 6.1% over the past two days, a level of volatility not seen since 2011. This sharp downturn has increased fears of a looming bear market. While we cannot predict where the market goes in the coming days and weeks, today’s market has key fundamental strengths most bear markets lack.
Economic Indicators are positive
The main differentiator between a stock market correction and a prolonged bear market is that bear markets are normally associated with a recession. During a recession, consumption, the main driver of the U.S. economy, falls for an extended period as unemployment rises. Stock markets don’t react well to recessions because earnings across sectors can decrease meaningfully. The fortuitous cycle that helps stocks during periods of earnings increases, improved outlooks and higher valuations reverses as earnings fall, outlooks dim and stock values plunge. Recessions are painful to stock investors.
Unemployment today stands at 4.1%, the lowest level in 17 years! In January, the U.S. economy continued its steady improvements, adding another 200,000 jobs, which marked the 88th consecutive month with U.S. job growth, the longest stretch since 1939. The U.S. economy is unlikely to fall into recession with such strong job growth. (more…)
- Crestwood on the MOVE!
We hope that your 2018 is off to a great start! We wanted to share the exciting news of our upcoming move. Our continued growth has created the need for more space and the opportunity to redesign a new office to allow us to better serve our clients!
As of February 26th, Crestwood Advisors will be located at:
One Liberty Square
Boston, MA 02109
We look forward to giving you a tour of our new space at your next visit. Parking arrangements at nearby P.O. Square Garage will remain the most convenient option when visiting. Please update your records, and as always, feel free to reach out to us with any questions.
- Crestwood Advisors adds new partner
We are pleased to announce the addition of Alyson L. Nickse, CFP®, CDFA®as a Partner at Crestwood Advisors. Alyson joined Crestwood Advisors in September 2012 as a Wealth Manager and has over 15 years experience in wealth management. Her focus on building integrated, holistic wealth plans that help our clients achieve their investment, philanthropic, estate & tax planning goals benefits both Crestwood and our clients as we continue to grow. Alyson graduated with a BA from Colby College and has earned her CFP® and CDFA® designations and is a founding member of the Crestwood Women & Wealth Collaborative.
We remain committed to devoting and retaining the resources necessary to deliver the wealth management results that our clients expect from us. We continue to experience significant growth in client assets under management and we are confident that this is due to the strength of our entire team’s focus on delivering strong investment and wealth management solutions to our clients and our commitment to open, honest and ongoing dialogue with our clients.
We are happy to welcome Alyson as a Partner at Crestwood Advisors and delighted to share the news with you.As always, please contact us if you have any questions.
- A discussion of “Liquid Alternative” Investments
Throughout financial history, every bull market seems to be characterized by some new investment product or vehicle that captures investors’ fancy. Like housing bonds in the early 2000’s, mutual funds in the 1980’s, and junk bonds in the 1970’s, liquid alternative assets appear to be that vehicle of the current bull market.
Prior to 2008, alternative investments were primarily available to only endowments and institutional investors. However, in recent years, investment companies created mutual funds with the promise of bringing similar strategies to all investors. These funds have seen tremendous growth and broad acceptance as many investors and advisors have allocated to these liquid alternatives in an attempt to build more diversified, sophisticated and endowment-like portfolios. Unfortunately, performance of liquid alternatives funds over the last five years has broadly disappointed investors. (more…)
- “Wake Me Up When September Ends” – Green Day
September is historically the worst calendar month of the year for stock market returns. Since 1950, the average September return for the S&P 500 index is -0.7%. Additionally, negative news which could affect stocks appear to be piling up including the impacts of Hurricanes Harvey and Irma, North Korea nuclear tests, the now extended deadline for debt limit talks and the continued Washington gridlock. The strong stock market optimism from the beginning of this year seems to have faded and, with stock market valuations above historical averages, the fear is “what goes up must come down”.
We don’t dismiss any of these risks but, as investors, we understand that predicting near-term movement of markets is impossible. Most bear markets are accompanied by a recession and, importantly, current indicators of the economy show we are still in a modest and steady expansion. The stock market’s performance this year has been driven more by strong earnings and economic strength than the promise of stimulus from President Trump’s agenda. This year has been a good reminder that politics makes for good headlines and feverish emotions, but policy change in Washington moves slowly. Additionally, while President Trump’s executive changes have been grabbing headlines most will have little to no immediate economic impact. (more…)
- Predicting the stock market is a bad idea
With the benefit of hindsight, few tasks look easier than pointing out a market peak. Looking at a price chart of the stocks market, it is easy to point to the top and say, “Here is where to sell stocks.” Unfortunately, there are few indicators that help anticipate market tops. While market valuation is useful over 10-year periods, it is a poor indicator over a 1-year period. At Crestwood, we believe that trying to beat the market by attempting to anticipate the stock market’s ups and downs is a fool’s errand due to the sporadic nature of returns, importance of tax-deferred compounding and irrational behavior of investors.
Every day matters
Over the past seven calendar years, if you missed the best 5 days in the stock market your return drops significantly, falling from 132.7% to 87.6%! The below chart shows the outsized effect of missing days in the market can have on long-term returns: (more…)
- Financial Planning: Creating a Dialogue to Help Achieve Your Goals
Whether it is retirement planning, funding future education for children or grandchildren, or the possibility of helping a family member financially down the road, most people have at least one question mark in their minds in regard to their financial goals.
We believe there can be great benefits in developing a formal financial plan. In fact, just the exercise of identifying personal goals can lead to greater peace of mind. Creating a plan for the future and a framework for measuring success that will continue to be relevant as personal circumstances evolve can increase the probability of achieving those goals. After all, if you cannot name the ambition, how will you know if you have succeeded or, more importantly, if you have drifted from the intended path? Defining an individual’s objectives, along with the perceived challenges in getting there, will flesh out the issues and will help separate the ‘wants’ from the ‘must haves’.
- Sequester – what’s next?
Heading into the end of 2012 headlines about the pending “Fiscal Cliff”, an uncomfortable combination of spending cuts (sequestration) and tax increases due to kick in on January 1st, dominated the news. Ultimately, Congress made a deal on tax rates but decided to kick the can down the road again on sequestration to buy some time to negotiate before spending cuts were imposed. Two months later the new deadline of March 1st is upon us and still nothing has been decided. Once the sequestration cuts go into effect the impact for this year will total to be worth about $50bn, the equivalent to about 0.5% of GDP over that period.
The cuts are to be split between the Department of Defense and discretionary spending areas like education, food inspection and federal courts. The cuts were designed this way to entice both sides of the aisle to work towards a compromise. Clearly, that has not worked so far leaving the very real possibility of these budget cutting measures being enacted. If the sequester becomes a reality many government workers are likely to see reduced hours in an effort to avoid the need to lay people off. All in, as many as 1.8 million government employees could find themselves losing full time status. That would be the equivalent of cutting about 400,000 jobs from the economy.
These cuts will trickle down to the state level as well. Here in Massachusetts as many as 350 teacher and aide jobs may be lost due to decreased federal government funding. In addition to this, programs concerning clean air and water standards, child care programs for disadvantaged families and nutrition assistance for seniors are also liable to be greatly impacted. While the actual outcome of the sequester is unknown at this point, we do know that the cuts would cause most government agencies and programs to significantly alter their operations going forward. (more…)
- Crestwood Advisors LLC expands its research capabilities
FOR IMMEDIATE RELEASE
Crestwood Advisors LLC is pleased to announce that Nick Gaskell has been hired to the position of Research Associate.
“Nick brings significant asset allocation experience and will be a welcomed addition to the research effort”, said Robert Ix, CFA, Managing Partner. “We are fortunate to have Nick on the team and excited to continue to invest in our research capabilities”.
Prior to joining Crestwood Advisors, Nick was an Investment Analyst at John Hancock Financial Services in Boston where he was responsible for oversight, due diligence, and manager selection for multi-asset portfolios. Previously, Nick was an Investment Associate at Kraemation Investment Advisors in Wellesley, MA. Nick earned his undergraduate degree at Suffolk University and, in June, sat for the level III CFA exam.
Crestwood Advisors LLC, based in Boston, Massachusetts, is a boutique investment and wealth management firm serving high-net-worth individuals and families. For additional information, please contact John W. Morris, Managing Partner at 617.523.8880 or visit our web site at www.crestwoodadvisors.com.
- A Gift that Keeps on Giving
Was it really only a few short months ago that we were worrying about the fiscal cliff and sequestration? It seems that, while we as a nation continue to find ourselves settling into the “new normal”, the more things change the more they stay the same.
Today the average savings of a 50 year old is only $43,797 and 80% of people ages 30-54 do not believe they will have enough money put away for retirement (http://www.statisticbrain.com/retirement-statistics/). These unfortunate statistics illustrate how a majority of Americans are unprepared for retirement. An early start to savings in a retirement account is not only an important leg-up to beginning to build financial security, but also a valuable learning opportunity. Unfortunately, teenagers with part-time jobs and even young adults in their 20’s & 30’s are often hard-pressed to commit to saving towards their retirement goals due to cash-flow issues. The good news is that, as long as they have earned income, you can gift to Roth IRAs on their behalf; a gift that will continue giving.
In 2013, the amount of money you can directly give another person without incurring a gift tax is $14,000. These annual gifts are a tool for parents and grandparents who want to transfer wealth to younger generations of their family as tax efficiently as possible, and are most often donated to the beneficiary’s taxable accounts. When the gift is used to fund Roth IRAs, any growth in the account, as well as withdrawals, are sheltered from income tax as long as the IRS guidelines are followed. For younger beneficiaries, this is a good way to start saving for retirement since they have so many years ahead of them for their money to grow.
The primary limitation for this strategy is that the child or grandchild owning the Roth IRA (or if married their spouse) must have some earned income (W-2, Schedule C, etc.). The Roth owner must also have total income under certain thresholds in order for a contribution to be made directly to a Roth IRA account (it should be noted that there are some loopholes for contributions to Roth IRAs for households that earn in excess of the AGI limits). In 2013, the limitations are as follows:
Assuming IRS guidelines are followed, withdrawals from the account in retirement are 100% tax-free. While there is no crystal ball telling us what the federal tax system may look like next year, let alone decades from today, it is hard to imagine an environment when tax-free income would lose its appeal. (more…)
- Crestwood Perspectives: Trump’s Impact on Investment Markets
Yesterday’s unexpected election result causes investors to wonder what can be expected over the next few years from a Trump presidency and a divided country. This election has been highly emotional and personal, leaving many of us bleary-eyed and uncertain about the future. The high level of emotion in this election is reflected in global stock markets, which initially sold off on Wednesday following Trump’s victory only to recover strongly as the day progressed. At Crestwood we know that emotions and investing don’t mix well. We try to look past the rhetoric to analyze potential long term outcomes of the election.
Markets don’t like uncertainty and global stock markets initially sold off in reaction to Trump’s surprise victory. Adding to investors’ unease has been Trump’s avalanche of eye-popping rhetoric throughout the campaign. Trump wants to fire Janet Yellen, Chair of the Board of Governors of the Federal Reserve, tear up the North American Free Trade Agreement (NAFTA) and even suggested renegotiating the U.S. debt obligations. These comments are a small sample of his suggested changes that concern investors. With all of these comments long on rhetoric and short on details we are left speculating, for the moment, on how a Trump presidency will affect the markets.Early indications are that President Trump will leave most of the rhetoric and tweets behind, and focus on his priorities. It is important to remember that changes take time, and Washington is a system of checks and balances that prevents one individual from rearranging policy overnight.
Economic Policy priorities
Trump wants to stimulate economic growth and employment via:
- Corporate tax reforms: reduce the corporate tax rate to a flat 15%, and reduce the tax on repatriating profits earned overseas.
- Individual tax reforms: reduce seven tax brackets to three, treat carried interest as income, repeal 3.8% Obamacare surtax on “net investment income”, repeal the AMT tax and repeal most of the estate tax.
- Spending reforms: Increase government spending on infrastructure and defense
Depending on what Congress approves, these priorities would most likely add to economic growth. Also it is reasonable to expect that these changes would expand the annual budget deficit to 6%-7% of GDP from 3.0% today.Economically, the most impactful change could be on trade as Trump wants to renegotiate NAFTA and has even suggested a 45% tariff on Chinese goods. During this election, both parties attacked free trade as many U.S. voters believe that it has made their lives worse. By restricting trade, Trump hopes to keep jobs in the U.S. and improve wages.There are, of course, risks to these types of protectionist policies; tariffs could spark a trade war and increase the odds of a global recession. While improved salaries are good for individuals, wage growth increases the potential for higher inflation and interest rates. As president, Trump will have broad powers to amend trade deals without congressional oversight. We discussed in a recent Perspectives article our concern that many benefits of trade to the U.S. economy are underappreciated. This post is available to review again here.
In summary, we continuously monitor political changes that can affect investors and markets and yesterday’s election results were certainly a big one. Our initial review shows that Trump’s policies could increase wages and economic growth perhaps in a meaningful way. On the downside, we are on alert for higher inflation, higher budget deficits and/or global trade disruptions. Uncertainty drives market volatility and we expect that volatility will recede with added clarity regarding Trump’s cabinet choices and details on his policy initiatives.Yesterday’s trading action bringing stocks meaningfully higher and bond prices slightly lower yet again highlights the unpredictability of near-term market movements. As always, we build portfolios with long term goals in mind. Focusing on long term objectives helps avoid and minimize the emotional aspects of investing and risks of buying high and selling low. Hopefully, we can continue to add value by sticking to our strategy through multiple market cycles and keeping our eyes open for investment opportunities when they arise.
- Recent press release regarding Crestwood Advisors and Focus Financial Partners
Please click here to read the latest news regarding Crestwood Advisors and Focus Financial Partners.
- Implications of Populism
Why the anger? It’s the economy
One of the many notable characteristics of this unconventional presidential race is the broad-base populist uprising from both the left and right. Across the U.S., pockets of workers are fed up with dead-end jobs and stagnant wages. This anti-trade theme has resonated across both parties and will likely force changes in government policy, no matter who wins the election.
The primary cause of frustration is that workers across the U.S., especially those younger and less skilled, have faced falling standards of living since the Great Recession. A McKinsey report[ref] Poorer than their parents? A new perspective on income inequality
By Richard Dobbs, Anu Madgavkar, James Manyika, Jonathan Woetzel, Jacques Bughin, Eric Labaye, and Pranav Kashyap, McKinsey Global Institute, July 2016 [/ref] estimates that 81% of the U.S. population experienced flat or falling incomes from 2005 to 2014. The report shows similar results internationally with over 65% of households in 25 developed economies facing flat or decreased real income during the same time period. This equates to over 540 million people worldwide whose quality of life has not improved, many of whom are voicing their anger in elections. As we see in the U.S., these concerns are being integrated into both parties’ platforms. One only needs to look at Britain’s surprise Brexit vote to understand that these ‘new’ political forces should not be taken lightly. (more…)
- Matt Morse appears on NECN to discuss CVS and Target
Matt Morse appearance on NECN regarding CVS and Target – 06.16.15