Windsor Wealth Management LLC

Investment service in Topsfield, Massachusetts

Windsor Money Minute

Is market news scaring you? Here’s the bigger picture.

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Could the financial news headlines be more daunting?

Trade uncertainty and its economic ripple effects are behind most of these headlines. (Read our post for the “real” impact of tariffs.)

However, a crucial point often absent in media coverage is the historical link between market volatility and long-term portfolio growth.

For Example:

The below chart depicts the growth of one dollar from 1926 till 2024. The red lines highlight 20%+ market drops.

As you’ll see, time after time the market bounces back—even higher.

Your Financial Plan

We’ve built your financial plan to navigate market volatility.

Candidly, if you want long-term portfolio growth, then the price you pay is short-term volatility.

Unsurprisingly, we’ve seen this recent volatility before, i.e., during Covid. And, we bounced back from that—even higher!

Uncertainty drives volatility.

No one knows when the volatility will end. Nevertheless, we’re confidently buying valuable companies on sale.

I encourage you to stay the course and maintain your financial plan.

Reach out with any concerns or questions.

–David Bunker, Financial Advisor & Licensed Fiduciary

P.S. Thank you to everyone who requested a copy of Bill Perkins’ “Die With Zero.” I was thrilled by the response following last month’s email, How To Spend Confidently & Without Regret in Retirement, where we discussed the book. I still have a few copies available, so please let me know if you’d like one.

Before You Go

Get help optimizing your retirement income. Download our FREE “Prolonging Retirement Income” checklist.

Also, receive help retiring to the life you want, schedule a complimentary financial planning consultation.

This communication was prepared with financial writer Sharron Senter’s assistance, based on interviews with David Bunker, a financial advisor and licensed fiduciary.

S&P 500 Shifts From Home Runs to Singles and Doubles

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For the past few years, the Magnificent 7 have dominated market earnings growth, at one point soaring nearly 60%. (see chart)

However, this pace is unsustainable.

As expected, the Mag 7’s (Apple, Microsoft, Amazon, Nvidia, Tesla, Alphabet and Meta) earnings growth is slowing. It’s now projected around 20%, still a strong gain.

Meanwhile, the rest of the S&P 500 is growing steadily.

This is a welcome sign, since diversification helps manage risk, (i.e., instead of home runs, the market’s delivering singles and doubles—small, steady gains that add up over time).

Let’s face it, home runs are great.

But, a well-rounded team—built on singles, doubles and solid defense—wins more games.

The same goes for diversification in investing.

What’s causing the shift?

Steady economic growth is helping drive the broader earnings, including a GDP around 2.5-2.7% and low unemployment. AI also remains a key growth driver.

It’s encouraging to see more companies contributing to earnings growth.

Granted, the right side of the chart (gray shaded area) is an estimate, but if these trends hold, we’re likely looking at a more balanced market in the coming months.

PS: If you missed it, we previously shared a detailed update on the economy: The Economy, Tariffs & Consumer Sentiment.

–David Bunker, Financial Advisor & Licensed Fiduciary

Before You Go

Get help optimizing your retirement income. Download our FREE “Prolonging Retirement Income” checklist.

Also, receive help retiring to the life you want, schedule a complimentary financial planning consultation.

This communication was prepared with financial writer Sharron Senter’s assistance, based on interviews with David Bunker, a financial advisor and licensed fiduciary.

Catch-Up Contributions: How $1,000 May Elevate Retirement

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Retirement planning is all about maximizing your resources, and for those 50 and older, catch-up contributions offer a meaningful opportunity to do just that.

The following two charts illustrate how adding $1,000 annually to your retirement savings (the catch-up amount) can grow to an additional $21,551 by age 67, assuming a 7% annual return.

Chart A (no catch-up)

Chart B (includes $1,000 catch-up contribution)

Source: Windsor Wealth Management, Chart A: Initial Balance $2,000,000, Annual Limit $7,000 at 7% annual return. Chart B: Initial Balance $2,000,000, Annual Limit $7,000 + $1,000 Catch-Up at 7% annual return.

While $21,551 isn’t necessarily a life-altering sum, think about the possibilities that extra cushion could provide in retirement.

For example, maybe you:

  • Boost your living experience, (e.g., add a cozy sunroom for year-round enjoyment).
  • Establish a small scholarship in your family’s name.
  • Fund an annual vacation for the next decade, (e.g., rent a beachfront home to host family reunions).
  • Support family milestones like a grandchild’s education or wedding.

The key takeaway?

Every dollar saved today creates more possibilities for tomorrow.

If you’d like to explore how catch-up contributions fit into your financial strategy, reach out.

PS: In case you missed it, we wrote a detailed post describing 2025 Tax Planning Resources, including a Key Financial Data spreadsheet.

–David Bunker, Financial Advisor & Licensed Fiduciary

Before You Go

Get help optimizing your retirement income. Download our FREE “Prolonging Retirement Income” checklist.

Also, receive help retiring to the life you want, schedule a complimentary financial planning consultation.

This communication was prepared with financial writer Sharron Senter’s assistance, based on interviews with David Bunker, a financial advisor and licensed fiduciary.

What’s the Santa Claus rally phenomenon? 5 Potential Factors

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Ho, Ho, Ho.

The year just isn’t complete without mentioning the Santa Claus rally.

Santa Claus Rally
Photo by Microsoft’s AI Image Creator

Santa Claus Rally

The Santa Claus rally is a stock market seasonal trend; specifically, stocks tend to rise during the last five trading days of December and the first two days of January.

The Santa Claus rally phenomenon is often attributed to several factors, including:

Increased Optimism: Investors are feeling festive.

Vacations: Many institutional investors are on vacation, (i.e., fewer large trades reduce market volatility).

Less Tax Activity: Tax-loss harvesting typically slows down in late December, compared to early December.

Window Dressing: Financial firms may make strategic buys in December to improve the appearance of their portfolios.

Year-End Bonuses: Many individual investors use their year-end bonuses to buy stocks, which can boost market activity and prices.

Will it be a jolly good December for stocks?

Only time will tell!

While we’re waiting, here’s a quick look at the last 26 years:

Santa Claus Rally
Source: Investor’s Business Daily

Related: For more stock market seasonal trends, check out our blog post, Stock Market Seasonality and the September Effect.

Happy Holidays

As the year winds down, I hope you find time to relax and recharge. Reach out anytime.

With gratitude,

–David Bunker, Financial Advisor & Licensed Fiduciary

Before You Go

Get help optimizing your retirement income. Download our FREE “Prolonging Retirement Income” checklist.

Also, receive help retiring to the life you want, schedule a complimentary financial planning consultation.

This communication was prepared with financial writer Sharron Senter’s assistance, based on interviews with David Bunker, a financial advisor and licensed fiduciary.

Average Holiday Spending and Shopping Destinations

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‘Tis the season for spending.

Despite inflation concerns, consumers plan to spend more this year than last holiday season.

Holiday Spending
Photo by freestocks/Unsplash

Average Holiday Spending

The average person is expected to spend $902 on winter holiday items this year, according to a recent National Retail Federation (NRF) survey.

The spending increase (up from $875 in 2023) is mostly attributed to gifts for family members.

Of the $902 shoppers plan to spend, approximately $641 is on gifts for family, friends and co-workers. The remaining $261 will be spent on seasonal items (e.g., food, decorations, cards), according to NRF.

Shopping Destinations:

Holiday Spending and Shopping Destinations
Chart Source: National Retail Federation

Overview: Holiday Shopping Destinations & Trends

Online shopping is the most popular location for the holidays, followed by traditional retailers.

Gift cards are the most popular gift request.

Also, younger consumers (ages 18 to 24) are increasingly turning to thrift stores and resale shops for sustainable and budget-friendly options, according to NRF.

Wishing you a wonderful holiday season.

Sincerely,

–David Bunker, Financial Advisor & Licensed Fiduciary

PS: If you missed our earlier post discussing current money moves, find it here.

Before You Go

Get help optimizing your retirement income. Download our FREE “Prolonging Retirement Income” checklist.

Also, receive help retiring to the life you want, schedule a complimentary financial planning consultation.

Elections and Your Investments, Stay the Course

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The presidential election is fast approaching.

Generally, elections create uncertainty and market volatility both before and after voting—no matter who wins. They also can cause investing anxiety.

Therefore, as a friendly reminder…

Stay the course, and remember our two key investing principles:

#1—Have a Plan, Play Your Plan

#2—Control What You Can Control

While short-term market fluctuations can be unpredictable (and uncomfortable), maintaining a long-term investment strategy has historically outperformed other approaches.

For example, let’s consider the following two charts:

CHART 1

Stocks have had a positive return in 83% of presidential election years, according to Hartford Funds research.

Elections and Investments

See Hartford Funds full analysis.

CHART 2

What happens after the next administration takes power?

The following chart created by Russell Investments, analyzes three scenarios to show how a $100,000 investment might perform in the first year and three years after an election.

Spoiler Alert: Remaining invested pays off.

Elections and Investments
Data source and analysis: Morningstar Direct. Time periods examined: 1977-1979, 1981-1983, 1985-1987, 1989-1991, 1993-1995, 1997-1999, 2001-2003, 2005-2007, 2009-2011, 2013-2015, 2017-2019. Equity: Ibbotson U.S. Equity Index (1975-1983), Russell 3000 Index (1984 – Present). Bonds: Ibbotson Intermediate Bond Index (1975-1985) linked to Bloomberg U.S. Aggregate Bond Index (1986-Present). Cash: Citigroup 1-3 Month T-Bill Index. Index returns represent past performance, are not a guarantee of future performance, and are not indicative of any specific investment. Indexes are unmanaged and cannot be invested in directly. In USD.

While the future is uncertain, historically, staying invested has proven to pay off in the long run.

Election & Investing News (Be Skeptical)

There’s an amazing amount of election and investing news misinformation.

Therefore, we’re encouraging you to question the legitimacy of all news.

  • Consider the Source: Be aware of news outlets’ biases and agendas.
  • Check Multiple Sources: Verify what you’re being told.
  • Use Fact-Checking Resources: For example, Snopes is a fact-checking website that debunks rumors and hoaxes, and FactCheck.org fact checks politics.
  • Be Skeptical: Approach news with a critical eye; question everything you read.

Related: Speaking of being skeptical, in a recent client letter we discussed 12 Steps to Help Protect Yourself From Data Breaches. Being skeptical of all-things-digital ranks at the top to help protect your personal information.

Finally, if you’re experiencing increased anxiety due to the elections, taking a break from news and social media can often help settle you.

–David Bunker, Financial Advisor & Licensed Fiduciary

Before You Go

Get help optimizing your retirement income. Download our FREE “Prolonging Retirement Income” checklist.

Also, receive help retiring to the life you want, schedule a complimentary financial planning consultation.

Capitalizing on Market Peaks, Investing in High Markets

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As of 9/4/24, the S&P 500 has hit 33 new all-time highs this year, which may leave some wondering if it’s too late to invest.

While the market may seem overvalued, historical data tells a different story…

Consider this chart showing the S&P 500’s rising highs over time:

While the chart reflects periods of volatility and temporary downturns, the long-term trend is characterized by a series of higher highs.

Recent upward trends have been fueled by economic growth, technological advancements—especially in AI—rising corporate profits and strong consumer spending.

Remember, if we wait for the market to decline before investing, we’d be engaging in market timing, which we avoid since it’s nearly impossible to consistently predict short-term market movements.

Related: Understand the stock market’s seasonality, read last month’s client letter: Stock Market Seasonality and the September Effect.

Before You Go

Get help optimizing your retirement income. Download our FREE “Prolonging Retirement Income” checklist.

Also, receive help retiring to the life you want, schedule a complimentary financial planning consultation.

Stock Market Seasonality & the September Effect

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We’re anticipating a bumpy September, aka the September effect.

Certainly, the past doesn’t dictate the future. However, data collected since 1928 show the market often dips in September.

S&P 500 Monthly Returns from 1928 through 2023
(See the full set of charts here.)

The Truth About Stock Market Seasonality

In reality, slower stock market activity in late summer through September is likely due to financial professionals taking vacations.

Less people working means less trading. This can also cause bigger market swings, since there are less trades to neutralize stock fluctuations.

Apathy likely plays a role too.

Some people simply don’t work as hard in the summer.

Also, when vacations are over, many financial professionals start rebalancing portfolios.

This often includes selling underperforming stocks, which can create downward pressure on the markets.

Santa Claus Rally

The chart also highlights a common Q4 occurrence: the Santa Claus Rally, when the market tends to swing upward.

Remember, consumer spending makes up two-thirds of the economy. The markets tend to increase at year-end in anticipation of holiday spending. (Roughly 19% of annual retail sales happen in November and December.)

Also, another common December occurrence you don’t often hear about is: window dressing.

Essentially, financial firms buy well-known and well-performing stocks to make their financial statements look better. There are legal measures to curb these activities, but it still happens. Either way, the activity adds to the December upswing.

Embrace Volatility

We view volatility as an opportunity.

While it’s not always the case, periods of volatility can be a great time to purchase stocks at attractive prices.

Of course, volatility is just one factor to consider when choosing investments.

Other considerations include market performance year-to-date, the political environment, the situation in the Middle East, the economy overall, interest rate changes and more. (Remember, it’s our job to worry about all these factors for you, so you can focus on enjoying yourself.)

Before You Go

Get help optimizing your retirement income. Download our FREE “Prolonging Retirement Income” checklist.

Also, receive help retiring to the life you want, schedule a complimentary financial planning consultation.