LWP investment strategies (as of March 31, 2021)

April 1, 2021

We take many market and economic factors into account when adjusting portfolios on clients’ behalf. These are some of the conditions currently factoring in to our strategies.

Expected economic rebound

Vaccinations are increasing and market consensus continues to coalesce around the idea of a strong economic rebound this year. Continuing accommodative policy from the Federal Reserve (the FED) and the expectation that Washington will produce another round of fiscal stimulus play into the reaction we have seen in the market.

LWP Strategy:  For the above reasons, as suitable, we are continuing to allow equities to run 5% over target. We have followed this strategy since the Feb/March 2020 downturn with good results. Of course, as you might expect, we are continuing to carefully monitor markets with regard to this and other strategies.

Shift from technology to “everything else”

Unlike the mid-to-late 2020 “tech and then everything else” trend, there has recently been broader participation underlying the stock markets’ advance.

LWP Strategy: In February 2021, as suitable, we pared back the “high-flying” technology/growth sector and added to the value sector. In some cases (ESG portfolios, for example), the preferred balance was already in place.


Fear of future inflation has been driving higher bond interest rates. The 10-year Treasury interest rate increased to 1.73% as of March 31, 2021, from a little under 1% at the beginning of the year.1

LWP Strategy: We do expect moderate increases in inflation as prices rise over the next 12-24 months due to pent-up demand. It is too soon to tell if these price increases will be temporary or longer-term. Inflation is a concern, as it is “the retiree’s enemy.” Fortunately, certain investments can help counteract its effects. We have already added TIPS (Treasury Inflation-Protected Securities) to portfolios as suitable.


The reported unemployment rate of 6.2% (as of March 31, 2021)1 understates the weakness in labor market conditions. Federal Reserve (FED) Chair Jerome Powell recently noted that the rate would be closer to 10% adjusting for the decrease in labor force participation. This leaves the central bank “a long way” from achieving its unemployment goal.1

LWP Strategy:  We expect the FED to continue its accommodative stance, which tends to support a rising stock market and our strategy on your behalf of overweighting stocks.


This is the point in the economic cycle when many types of quality bonds look less attractive than stocks due to their modest returns. Depending on the bond type, an annual rate of return of approximately 1% to 3% or even modest negative results is common.

LWP Strategy:  We advise clients to hold bonds for protection and believe a protection element is important in many portfolios. However, as we overweight stocks 5%, we underweight bonds 5%.  Also, as suitable, we are diversifying the bond portion of portfolios with alternative investments, municipal bonds, and international bonds.

Contrarian buying

If another significant stock market downturn occurs, we are ready to purchase as follows (from December 31, 2020, 3662 price, and based on support levels):

  • 2% of portfolio in stocks at -18% (S&P 500 3010)
  • 3% of portfolio in stocks at -25% (S&P 500 2750)
  • 3% of portfolio in stocks at -37% (S&P 500 2305)

We will choose stock categories that present opportunity and retain your portfolio diversification.


1. Yahoo Finance, March 31, 2021.

TIPS: Treasury inflation-protected securities (TIPS) are a type of Treasury security issued by the U.S. government. TIPS are indexed to inflation in order to protect investors from a decline in the purchasing power of their money. As inflation rises, TIPS adjust in price to maintain its real value

This information is not intended as a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Expressions of opinion are as of this date and are subject to change without notice. This information is not intended for a solicitation or an offer to buy or sell any security referred to herein. Investments mentioned may not be suitable for every investor. Investing involves risk and investors may incur a profit or a loss, including the loss of all principal. Diversification does not assure profit or protection against loss. Bond prices and yields are subject to change based upon market conditions and availability. If bonds are sold prior to maturity, you may receive more or less than your initial investment. Holding bonds to term allows redemption at par value. Bond prices and interest rates have an inverse relationship. Dividends are not guaranteed and must be authorized by the company’s board of directors. No one graph, chart, formula, or software can in and of itself be used to determine which securities to buy or sell, when to buy or sell them, or assist any person in making decisions as to which securities to buy or sell or when to buy or sell them. Any chart, graph, formula, or software used is limited by the data entered and the created parameters.

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