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In a Volatile Year for Investments, Advisors Focus on the Long Term

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Pat Grenier says investors worried about market volatility shouldn’t panic, but instead seek competent advice.
Special Coverage Wealth Management

Bumps in the Road

Pat Grenier says investors worried about market volatility shouldn’t panic, but instead seek competent advice.

 

Early April was an anxious time for many investors, but not a surprising one for the advisors they rely on.

“We prepped for a volatile market this year,” said Pat Grenier, owner and principal at Grenier Financial Advisors in Springfield. “We thought the market was high. We thought there would be a pullback. We didn’t expect the amount of volatility that we had, but we did expect a little bit of a pullback.”

The early months of the Trump administration have impacted the markets in a number of ways, particularly with an aggressive series of tariff decisions — some in force, some only threatened as negotiating tools — that have triggered fluctuations in the stock market and plenty of client phone calls to investment firms. But Grenier isn’t overly concerned, especially as things are calmer now.

“To me, this is more of an event-driven gyration. Even though we did expect some pullback, I think a lot has to do with all the negative talk about tariffs,” she explained. “So, one of two things is going to happen. The tariffs are going to work out, and the market’s going to do well. Or tariffs are not going to work out, and then the market will adjust and eventually do well. So I’m not negative.

“I think people should not panic,” she went on. “I think they should seek competent advice and not assume things. We’re bombarded 24-7 with news bites, but they’re just news bites. They don’t tell you the whole story.”

“We didn’t expect the amount of volatility that we had, but we did expect a little bit of a pullback.”

Jeff Liguori, executive vice president and senior portfolio manager at Bradley, Foster & Sargent in Hartford, Conn., had similar feelings as the calendar turned.

“At the end of 2024, the optimism was pretty excessive. Everything had gone up. People were feeling really good about the market; it was up 20-odd percent from previous years. There was almost too much enthusiasm.”

So a correction was likely, even if some of the forces generating it were questionable, he added. “Economically, tariffs can be so excessive that it’s not healthy for the economy. But when we were in the throes of that, we told clients, ‘this is a manufactured crisis; it can easily be turned around with a stroke of a pen, or with potential legal roadblocks.’ And that’s how it played out.

Jeff Liguori

Jeff Liguori

“The data is 100% in your favor. Nothing ever goes straight up. We’ve lived through most of these crises — the housing crisis, the tech bubble, the Great Recession. All of those, time and again, have been incredible buying opportunities.”

“After a while, it’s been less of what we consider a headline risk. Before, when every headline came out, stocks reacted instantaneously. Over time, we’ve come out of that, and now people are asking how much of this is really going to materialize.”

That said, taking a sanguine view of the long-term health of the markets is much easier when the tides are calm than when they’re volatile, Liguori noted.

“But the data is 100% in your favor. Nothing ever goes straight up. We’ve lived through most of these crises — the housing crisis, the tech bubble, the Great Recession. All of those, time and again, have been incredible buying opportunities. It’s almost like, if there’s no pain, there’s no gain.”

 

Risks and Rewards

Tim Suffish, senior vice president and head of equities at St. Germain Investment Management in Springfield, said it’s important that investors understand the long-term nature of the firm’s strategies and how it approaches the market — and its inevitable shifts.

“If we’re doing our job well, we have a conversation with our clients up front about the risks and rewards of various asset classes,” Suffish explained. “Cash is the only asset that does not go down, but cash yields very little. Your checking or savings account is guaranteed by the FDIC, and you might get half of 1% a year. But it’s not going anywhere.

“On the other end of the spectrum, stocks are for the long term, and by looking back a few years, you can see what can happen with stocks. Right after COVID hit, stocks were down 35% in one month. It was one of the worst months ever for the markets. Of course, the economy got flooded with stimulus and low interest rates and bounced back.”

Tim Suffish

Tim Suffish

“We’ve been through it before, and the volatility and the drawdowns happen. The reasons may be different each time, but the global economy is resilient.”

That said, “when you talk about volatility, people need to know what to prepare for. If you can prepare for it, history shows you’ll be rewarded by taking on some risk.”

To explain, Suffish took a quick tour through the past 25 years of market-jarring events, and why risks tend to be short-term and rewards longer-term. The dot-com crash of 2000-01 saw the market down 50%, as did the housing boom and bust and resulting global financial crisis in 2008-09. China-related trade concerns in 2018 caused another 20% drawdown, followed by that 35% COVID-driven drop in 2020, and another 18% hit in 2022 caused by inflation concerns.

“Even with all that volatility and scary drawdowns — and these are not 5% moves in the market that, if you squint at your monthly statement, you don’t notice it; these are big numbers that you do notice — the stock market still averages, over that time frame, going back to 2000, about 7% a year.

“So the market historically rewards you for taking risks,” Suffish went on. “Taking risks is really the only way you’re going to get those rewards, and the rewards tend to be proportionate with your risk. So part of our counsel to clients who are nervous in a time like this is that it’s more than likely a repeat of what we’ve seen over the past 20, 25 years. We’ve been through it before, and the volatility and the drawdowns happen. The reasons may be different each time, but the global economy is resilient.”

Liguori agreed. “We have this philosophy that, when the market gets rocky and volatility increases, there’s always a reason for it, whether it’s something macroeconomic or, in this case, a combination of political and macroeconomic factors. We’ll hear clients say, ‘this time, XYZ is different than the last time.’ Yes, whatever is causing the volatility might be different, but the reaction is always the same. Economic decisions are being made by humans, and humans always act the same way.”

That said, he continued, it can be beneficial to be more aggressive when the market drops.

“No one wants to lose money, even if it’s just on paper. But if I’ve done my job and the market is down 20 but you’re down 10, maybe increase your exposure a little. If we look at the stock market in a broad sense, the time to be more aggressive on equities or stocks is at the point when humans feel really uncertain. It’s a contrarian way to look at it.”

 

Planning for Life

That long-range view of investments plays into how those we spoke with handle clients; they’re plotting out a path where investments will meet the various needs of life — a home purchase, college education, retirement — both now and well into the future.

“We have to know the client really well,” Grenier said. “Sometimes we know them better than their own family knows them. We have to know what makes them tick, what their goals are, what their aspirations are, what they want from a value perspective, what their values are, so that we can kind of guide them and use the investments as a tool to get them where they want to be. We do so much hand-holding for clients.”

A client’s portfolio can employ a range of vehicles, from mutual funds to stocks, bonds, and annuities.

“When somebody comes here, we want to make sure that they’re well taken care of and that the risks that they face are minimized,” Grenier went on. “And you have to acknowledge that they are nervous, and it is nerve-wracking, when you see the market gyrate the way it has. Nobody likes to see the value of their portfolio come down. So what I try to do is acknowledge that, ‘yes, I get it,’ and then I try to put it in perspective for them.”

Like Liguori, she said those nervous times can be an opportunity.

“We know the market is resilient. And when the market is down the way it was at the beginning of April, I used it as an opportunity to add because we were buying good companies on sale. We added in where we could.”

That said, clients who are closer to retirement — or already there — will be less likely to tolerate risk.

“If they are going to depend on their investments for a good portion of their living expenses, their livelihood, then you have to be more conservative with their investments,” Grenier said. “We’ve been using some buffer programs that kind of make sense — it does cap the upside, but it protects the downside.”

Suffish said portfolio diversification is the best path to enhanced returns while reducing risk.

“When you have diversity in asset classes that are not perfectly correlated, you can build that portfolio,” he explained. “Last year, large cap U.S. stocks were up 20%, but bonds were about flat on the year. But by mixing the asset classes — U.S. equities, foreign equities, bonds, cash, maybe some precious metals — these assets are not perfectly correlated with each other, so you get the blended return. But you also get the blended volatility or risk, which benefits the portfolio.”

Whatever the circumstances in the market, all those we spoke with said that those who start investing early in life — in their 20s and 30s, as opposed to 40s, 50s, or later — can exercise a greater degree of risk taking.

“A younger investor can afford to be more aggressive, can afford to be more speculative. They’re not going to feel the consequences for a long time,” Suffish said. “Our typical client is close to retirement or in retirement, so they need to be diversified and take the sharp edges off off the market downturns.”

Grenier agreed. “The earlier you start, the better, because you have time on your side. If you look back at the market throughout the years, there have been so many gyrations, and you might be caught in a point where the market is down. But if you’re looking at it long-term, it has only gone up.”

 

And Investors Should Expect the Roller-coaster Ride to Continue

By Contributor
Banking and Financial Services

Volatility Is the Order of the Day

By Jean Deliso

Jean Deliso

Jean Deliso

The market has acted like a roller coaster in recent months, up one day, down another — but where will it end up?

Most investors tend to get unsettled and concerned by such market conditions, and if you are in that group, now is the time to speak to your financial professional to ensure that your investment allocation is consistent with your financial goals. Those investors with a near-term retirement timeline generally should be more focused on preservation of capital. Those with multiple years or even decades before retirement can take a longer perspective as they have more time to wait out market volatility.

All investors should remember to be calm. The worst mistake in this market, or any market, is to try to time the ups and downs. Granted, this volatility can be unnerving, but it’s the price we pay for the potentially greater returns from investing in equities.

In the past 20 years (2000 to 2020), there have been at least two major bear markets with short-term losses in value around 50%, yet it’s also true that, from Dec. 31, 2002 to Dec. 31, 2018, the S&P 500 stock index tripled in value.*

Zacks Investment Management, one of the portfolio managers I work with, produced a white paper listing four reasons to expect more volatility in 2020. I think it’s worthwhile to share some of these highlights:

Reason 1: We cannot ignore history. Over the past 38 years, the S&P 500 has had corrections; they are frequent, and they are the norm.

Reason 2: Low volatility generally gives way to high volatility. From October 2019 to January 2020, the S&P index experienced an unusually low level of volatility. From a historical perspective, such periods of low volatility tend to give way to periods of high volatility. We saw examples of this type of market behavior prior to January 2018 and October 2018.

Reason 3: Stock buybacks are on the decline. Stock buybacks are a corporation’s main tool for reducing outstanding supply of shares, and thereby boosting shareholder value. Stock buybacks were down in 2019, with more declines expected in 2020. Fewer buybacks could mean a tougher road for corporations exceeding their earnings per their share targets. This could make investors jittery.

“The bottom line is that volatility can be a good thing for equity markets, sometimes unsettling but it is normal and to be expected.”

Reason 4: It’s not a straightforward election year. This does not necessarily refer to a political outcome, but more concerning is alleged foreign interference, and potential contested results, civil unrest, and other extraneous factors that might lead to a period of political instability.

 The bottom line is that volatility can be a good thing for equity markets. Though sometimes unsettling, it is normal and to be expected. I tend to agree with Zacks that the S&P 500 index is due for a correction this year on par with the historical averages after several years of increases. We could experience a correction in the 10% to 15% range.

Let’s remember that dollar-cost averaging can be a great tool in managing short-term volatility as well. While no one can predict the future, and the past is no guarantee of future results, historical performance has shown that market downturns can offer attractive investment opportunities, and dollar-cost averaging can help in this regard.

Remember, though, that dollar-cost averaging does not ensure a profit and does not protect against loss in declining markets. It involves continuous investing during a period of fluctuating price levels. To maintain such a strategy, investors should consider their ability to continue investing through differing market conditions.

This article would not be complete without mentioning continuing concerns about COVID-19. As a society, we don’t know enough about it yet to understand how pervasive it will become and how long it will impact the markets. It’s too early to assess the ultimate impact of the virus. Headlines continue to focus on the spread of the virus and those who become ill; however, one should keep in mind that most people who have contracted the virus have gone on to make a full recovery.

Weaker global growth does not often mean recession in the U.S., and the consumer remains a strong factor against a U.S. recession. Lower rates may further boost the housing market, and both manufacturing and wholesaling inventories are at high levels in the U.S., which could mitigate supply-chain disruptions from Asia. More accommodative monetary policy could serve to calm the financial markets and minimize the economic and psychological impacts.

From a financial perspective, it’s important to maintain a diversified portfolio for times like this, and in panicked environments, it’s imperative to keep a level head rather than simply react. Those investors with longer time horizons should try and remain calm and patient when volatility takes hold.

A well-designed financial allocation consistent with your risk tolerance and investment goals is the key. Investors tend to make short-term decisions with long-term assets, but it is important to keep a long-range approach with your money and stick to your investing goals.

For the shorter-term investors, now is a good time to connect and review your plans with your financial professional. Double-check to make sure that your goals and objectives are still in line with your investments. Also, it is important not to stay passive on the sidelines, as investors we need to be engaged in the process and be a full participant in the process.

Jean M. Deliso, CFP is a financial advisor offering investment advisory services through Eagle Strategies LLC, a registered investment adviser, and is a registered representative of and offers securities products and services through NYLIFE Securities LLC, member FINRA/SIPC, a licensed insurance agency. Eagle Strategies and NYLIFE Securities are New York Life companies. Deliso Financial & Insurance Services is not owned or operated by NYLIFE Securities LLC or its affiliates. Neither Deliso Financial & Insurance Services nor Eagle Strategies LLC or its subsidiaries and affiliates provide tax, legal, or accounting advice. Please consult your own tax, legal or accounting professional regarding your particular situation.

*Source: Standard & Poor’s 500 index, 12/31/18. Average annual returns are based on the S&P 500 Index from 12/31/02 to 12/31/18. Large-capitalization stock performance is measured by the S&P 500 index, an unmanaged index considered to be representative of the U.S. stock market. Prices of common stocks will fluctuate with market conditions and may involve loss of principal when sold. Results assume reinvestment of all distributions, including dividends, earnings, and expenses, and are not indicative of any past or future returns of any investment. It is not possible to invest directly into an index. Past performance is no guarantee of future results.

Developments Raise Profile of Great Barrington

By
Jennifer Tabakin
Community Spotlight

Community Spotlight

Jennifer Tabakin

Jennifer Tabakin says initiatives like high-speed broadband, environmental sustainability, and the arts all contribute to quality of life and help attract young people to town.

Jennifer Tabakin is a believer in using public investment to spur private investment. After six years as Great Barrington’s town manager — she’s stepping down in June — she has seen plenty of evidence to back up that philosophy.

“We’ve talked a lot about the investments we’ve made in Bridge Street, which is one of our side streets off Main Street,” she told BusinessWest. “Over the years, the public money put into it has been significant, and we’ve been able to see private development come along in response to it.”

Projects like Powerhouse Square, a mixed-use development on Bridge Street. “It’s literally steps from Main Street — exactly where new development should be,” said Town Planner Chris Rembold.

On the ground floor is Berkshire Co-op Market, a grocery store that’s moving from a different location and doubling its size. The development also includes space for smaller retail outlets and 20 new residential apartments on the second and third levels. In fact, that’s just a sample of a recent housing boom in town; in the past year alone, 228 new housing units were either built or permitted.

“We’ve been able to get far more downtown than I ever expected, ranging from affordable units to downtown condos. That meets the needs people have for a more walkable lifestyle” — one where residences are in close proximity to shopping, restaurants, and cultural amenities, Tabakin said.

One example of the latter is Saint James Place, which opened in 2017 as a home to small and mid-sized Berkshire County arts groups in need of performance, rehearsal, and office space. Created out of the historic St. James Episcopal Church on Main Street, several of its office spaces for lease have been filled by arts-related groups such the Berkshire Playwrights Lab, Flying Cloud, and the Berkshire Opera.

“It’s kind of a hub of supporting businesses and people. Not only are there traditional performing arts, but a dance studio, literary arts, and visual arts — and new media like computer design and software design.”

Saint James Place is now a thriving cultural venue, and we’re thrilled to have them here,” Tabakin said.

In October, in recognition of its vibrant arts life, the downtown was designated one of the state’s cultural districts by the Massachusetts Cultural Council.

“It’s a geographic area with not only plenty of cultural venues and things to do — like the Mahaiwe Performing Arts Center and Saint James Place as performing-arts venues — but it’s kind of a hub of supporting businesses and people,” Rembold said. “Not only are there traditional performing arts, but a dance studio, literary arts, and visual arts — and new media like computer design and software design.”

The cultural-district designation, he added, is a recognition of the vitality of the arts and culture in downtown Great Barrington, but it also serves a practical purpose. Cultural districts can access a stream of services including tax credits, economic incentives, planning assistance, grants, historic-preservation help, signs, and tourism promotion. Among the town’s plans is a shared cultural events calendar, which will help the various venues better coordinate their booking schedules, making it easier for visitors to know what’s happening when they spend a weekend or more here.

“It’s kind of an organizational effort, a marketing effort for the downtown,” Rembold said, adding that there’s much to market: the Mahaiwe and Saint James Place alone offer some 200 nights of entertainment a year. “And if something’s not going on there, you can go see a movie or a poetry reading or a Friday night film at the library. If you’re bored in Great Barrington, that’s your own fault.”

Getting with the Times

Another recent boon for downtown is the installation of fiber service. “It’s a strategy to make sure our downtown has the highest-speed broadband and can be competitive with our neighbors in the area, so people can locate here and take advantage of that higher speed,” Tabakin said.

“We have a private company covering all the development cost and infrastructure cost to bring fiber to downtown, and we’ll eventually start moving out to the rest of the community,” said Ed Abrahams, vice chair of the Select Board.

Great Barrington at a Glance

Year Incorporated: 1761
Population: 7,104
Area: 45.8 square miles
County: Berkshire
Residential Tax Rate: $14.98
Commercial Tax Rate: $14.98
Median Household Income: $95,490
Median Family Income: $103,135
Type of Government: Open Town Meeting
Largest Employers: Fairview Hospital; Kutscher’s Sports Academy; Prairie Whale
* Latest information available

Meanwhile, the town continues to make environmental sustainability common practice, moving all municipal, school, and community buildings to green energy sources and reducing use of single-use plastic products.

“For the past four years, we’ve supported eight large solar projects with a combined value of $16 million,” Tabakin added, while many town residents have gone solar as well.

All these factors — culture, high-speed broadband, sustainability — aim to position Great Barrington as a thoroughly modern community, even as it retains much of its quintessential old New England character, thus attracting more young families. Like other towns in rural Berkshire and Franklin counties, Great Barrington has seen the average age of its residents rise in recent years; the community has always been a popular spot for retirees, and there are a number of New Yorkers with summer homes in town.

But by bolstering ingredients like attractive (and affordable) housing, a vibrant downtown, a burgeoning cultural community, and outdoor activities (Ski Butternut is a prominent attraction), Great Barrington’s leaders are looking clearly at the future, which means attracting young people and especially young families.

Of course, those families will need to find find jobs here, and Great Barrington boasts strengths in a number of sectors, including education (Simons Rock of Bard College is located in town), healthcare (Fairview Hospital), technology (perhaps a dozen IT companies call the town home), the arts and tourism, the nonprofit community, and restaurants (the town is home to around 80 of them).

“We have challenges like other places, and we have to deal with the limited resources of a small town, but we have a very committed group here, and I have no doubt that will continue.”

“The challenge for the Select Board, and all of us, for that matter, is to maintain the vibrancy we have and support for our local retailers and existing businesses, and also be open to new businesses — to keep that appropriate balance and make sure we have diversity in the local economy,” Tabakin said. “That’s something we speak about a lot.”

One area of the economy that’s growing — literally — is the cannabis sector, which is something BusinessWest has mentioned in almost every Community Spotlight over the past six months. Great Barrington is no exception, with Theory Wellness opening the first retail marijuana store in Berkshire County in January, with others to follow. In the first month, the shop netted $2 million in sales and $90,000 in taxes paid to the town.

“They opened to long lines, which should level off as they get more competition,” said Abrahams, who quickly added that any cannabis business in Great Barrington should do well, due to the town’s proximity to Connecticut and New York, states where the drug is not legal. “This is new for all of us, but so far, there have been logistically few problems, and police report no increase in people driving under the influence.”

Continuing Commitment

As Tabakin looks back on her six years in office, she’s especially gratified at a Town Hall full of energetic and committed people, and a lot of new faces — during her tenure, 26 people were either promoted or started a career there.

“Several years ago, we were warned we had a number of people approaching retirement age,” Abrahams added, “and it’s been a really smooth transition replacing them with newer people.”

Having a well-run town, Tabakin said, speaks to a commitment to quality of life, one that’s evident in Great Barrington’s vibrant retail district, cultural attractions, quality schools, and more, she said.

“Many times, government gets a bad rap, but I don’t feel that’s the case in Great Barrington,” she told BusinessWest. “We have challenges like other places, and we have to deal with the limited resources of a small town, but we have a very committed group here, and I have no doubt that will continue.”

Joseph Bednar can be reached at [email protected]