School in 2020 offers unique challenges and opportunities

Since our inception back in 1981, we at Winch Financial have been passionate proponents of education. We believe that access to a wide variety of excellent educational resources strengthens a community and provides an easier path forward to its members. Several of our staff members, including our founder Christina Winch, began their careers as teachers. School likely will look very different for everyone this year and we send our support and encouragement to all of the teachers, administrators, students and families who, we know, will rise to these historic challenges. We’re here to help in those efforts. If you have questions about using your 529 plan to pay for educational expenses for which you had not originally planned, please call us. In many cases, you can use your college savings funds to pay for private tuition or expenses related to homeschooling. Likewise, if your student has received a refund for college expenses paid for through their 529 plan and you are unsure how to use those funds without incurring a penalty, please check with us. Unless you use that refund for other approved educational expenses you will probably need to reinvest them in the 529 plan. If your college student has decided to take a gap year, you may be wondering about that 529 plan you set up. The good news is, those plans have no expiration date, so you can use the funds to pay tuition and related expenses when your student returns to school. If he or she decides not to return at all, you can always change the beneficiary on the account, or use the funds to pay for vocational school or approved training programs. With so many opportunities for online enrichment, you may even want to use the unused funds for your own continued education. As this global pandemic limits opportunities for travel and entertainment, you might consider using your extra free time to further your… | Read More »

Active money management and the cloud

The success of any active money managers often relies on his or her ability to sift through and analyze data without being distracted by outside noise. This concentration allows them to base their investment decisions on actual metrics rather than on the media interpretations of them. They look at market drivers, consumer sentiment, sector growth, each company’s fundamental and technical health, industry structure and sustainable competitive advantages. Our investment team, for instance, has been tracking companies related to cloud computing for more than five years and that persistence has paid off. Stocks driven by cloud computing have outperformed the S&P by 8.53% year-to-date, by 9.28% in 2019 and by 21.37% in 2018. Examples of this type of stock include Amazon, Microsoft, Google, Salesforce, Alibaba Group and Adobe. Companies related to cloud computing have been outperforming analyst’s predictions and have become some of the fastest growing on Wall Street with high profit margins and return on capital. According to a recent article in Bloomberg Magazine, though, many active managers missed this trend, with just 37% beating their benchmarks in January. One major reason for this lag has been the tendency of these active money managers to shy away from the technology sector, believing many of its strongest performers have run their course. Based on metrics, though, this sector – and those companies related to cloud computing in particular – still have room to grow. The companies enjoy high barriers to entry, maintain power over their suppliers, possess pricing power and face little threat of substitute products. When the economy does slow down, cloud-related companies should remain resilient due to their efficiency, lower operating costs and easy access to state-of-the-art innovation. As with any sector, the technology sector will face its challenges and our analysts will be working hard to take advantage of new opportunities and to mitigate any losses these challenges present. An added advantage our active managers enjoy is that… | Read More »

Three key investment lessons from the past decade

As we unwrap a fresh new decade, we find ourselves looking both backward with appreciation for all the past has taught us and forward with energy and optimism. This kind of chameleon-eyed vision allows us to gather all we’ve learned, pack it up and take it into the New Year. Here are three lessons this decade offered that we’d all be wise to carry forward: Bull markets don’t last forever, but they don’t end with every dire prediction either. Like almost anything else in investing (and life!), the key is to analyze data and react based on knowledge and not emotion. All investors want to make money and, with sustained low interest rates, the place to do that right now is in the equity markets. So, the human desire to succeed is a key market driver and that won’t go away because a yield curve briefly inverts. Track the trends while ignoring the trendy. We live in a fast-changing, noisy world in which today’s Tik Tok video can become tomorrow’s CAN’T MISS INVESTMENT! But not every IPO gains traction and plenty of them fail outright. Patience is the key here, along with studied analysis. Who would have thought Amazon would be a good investment back in 1997 when it launched at $18 per share. Today, it trades at closer to $1,800 a share. For every Amazon, though, there’s a, which declared bankruptcy nine months after its IPO. Data drives sound decisions. Read the headlines, but don’t invest based on them. It’s important to keep up with the daily news but it’s equally important to understand their impact on the markets specifically and the economy as a whole. President Trump’s Impeachment hardly moved the markets at all, though his administration’s trade war with China had nearly a daily impact. Even when geopolitics develop into a headwind, they are just one of several factors impacting the markets. All three of these… | Read More »