Insight & Commentaries
The past year was marked by sharp swings in market confidence. After a brief period of heightened volatility and tariff-related anxiety, optimism returned quickly, driven by enthusiasm around artificial intelligence, expectations for policy support, and easing financial conditions. Equity markets ultimately reached new highs, reinforcing the role confidence and liquidity now play in shaping market outcomes. These developments have occurred against a backdrop of extraordinary aggregate wealth. Over the past decade, U.S. household net worth has nearly doubled, supporting consumption, investment, and risk-taking. In many respects, last year’s optimism was justified by subsequent economic and market performance. At the same…
In recent years, the stock market has embraced an unabashedly optimistic and downright speculative attitude. While exciting, more recent returns and individual stock valuations are untenable and portend other frailties embedded in this market rally. Specifically, lofty growth expectations, an underappreciation of risk, and a historically low market yield underscore the need for caution. At Washington Crossing Advisors, we invest equity portfolios using a strict Quality discipline; focusing on companies with low debt, profitable assets, and predictable cash flows. We believe that holding an allocation in High Quality stocks can serve as ballast to an overall portfolio, especially when market…
If you own a diversified, quality-oriented portfolio, the last year has likely been frustrating. Conservative strategies—including many dividend-focused portfolios—have lagged the S&P 500, even as markets have risen sharply. That gap naturally raises questions. Why has your carefully constructed strategy trailed the S&P 500? And should you reconsider your approach? Before answering, consider what happened the last time investors faced this choice. In March 2000, a newly retired couple sat down with $1 million, a 4% withdrawal plan, and a portfolio full of the market’s biggest winners. Over the previous decade, technology stocks had made them millionaires. The future had…
We sought to look back at twenty years data for the S&P 500 to study the source of return by company risk category. As the graph and tables that follow show, the results were eye opening.
When most of us think about growth, the focus is usually on how quickly a company might expand in the future and, sometimes, on recent growth. But the more important question for your portfolio may actually be not how much growth a company might deliver — it is how confident we can be in that growth. We will argue here that during risk-loving bull markets (like today), focus tends to shift to the “how much” question, and during more normal, risk-aware markets, reverts to the “how confident” question. To prove our point, we will offer three charts. The first chart…
Markets have proven more resilient than expected in the first half of 2025, rebounding quickly from tariff-driven volatility. While headline earnings remain strong, pressures are building beneath the surface — particularly in inflation, valuations, and global growth dynamics. Foreign developed markets have outpaced the U.S., supported by a weaker dollar and improving international conditions. Meanwhile, we are raising our long-run U.S. productivity forecast to 2.5% from 1.75%, reflecting growing confidence in the transformative impact of AI. Like the internet boom of 1995–2005, we expect AI to drive meaningful productivity gains, boosting long-term equity return potential.
Dividend investing allows investors to focus on fundamentals rather than becoming distracted by the stock market’s constantly changing mood. This premise has been repeated decade after decade by some of the greatest market scholars who ever lived. This perspective lies at the heart of what we do at Washington Crossing Advisors (WCA). The WCA Rising Dividend portfolio strategy centers on dividend increases from solid, high-quality companies at reasonable prices. Consistent dividend payments from fundamentally strong companies (low debt, profitable assets, consistent business) allow us to look through short-term market noise and stay focused on the long-term prospects of a business….
As 2025 draws to a close, the economy remains stronger than many expected. The Federal Reserve’s modest 0.25% rate cut to 4.25% signals a gentler stance, but persistent inflation suggests only gradual easing ahead. Equity and credit markets have rallied to record valuations, leaving limited margin for disappointment. Bonds once again offer meaningful real returns and portfolio balance, while global growth leadership is shifting toward developed markets. With optimism high and valuations stretched, we believe investors should emphasize diversification, quality, and flexibility—positioning portfolios to potentially benefit from resilience while staying prepared for bouts of volatility that often follow periods of…
Our recent lag versus the S&P 500 reflects a market led by lower-quality and extremely highly valued companies. While challenging, this is a well-understood dynamic of quality investing. Low-quality phases can last for a time, but history has shown they were followed by renewed leadership in high quality. The current low-quality phase is already longer than average and may be nearing exhaustion. Credit and valuation signals now suggest downside risks are rising even as the economy continues to expand. Where We Are Now This has been a speculative stretch: lower rate hopes, and pro-growth policy expectations have pulled the leadership…
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