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Considerations For 2025 And Future Tax Years
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Navigating the Evolution of Private Wealth Management
Wealth Insights | InsightGW&K’s Director of Private Wealth Management, Dan Fasciano, shares his thoughts about the state of the wealth management business today and offers valuable advice for those seeking to secure their financial future.
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Strategies for Wealth Transfer Success
Wealth Insights | InsightGW&K’s Private Wealth team shares actionable strategies to prepare your next generation for financial success.
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Latest Insight
Diversification: A Reminder of the Bond Market’s Role
Wealth Insights
Diversification matters: Bonds historically outperform cash in downturns, offering principal protection and steady income alongside stocks.
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Latest Market Commentary
State Of The States 2025 — Poised For Fiscal Stability
Municipal Bond
Fiscal conditions across state governments remain healthy as the sector heads into 2025.
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Diversification: A Reminder of the Bond Market’s Role
Recency bias is the cognitive tendency to place too much weight on recent events or information when making judgments and decisions, often at the expense of historical context or long-term trends. It’s something that we see from investors all too often in today’s environment. Since 2020, the stock and bond markets have experienced increased correlation, particularly as inflation and interest rates have risen. That, paired with the Federal Reserve (Fed) maintaining attractive cash yields, has led to many investors looking to protect their principal with a mix of stocks and cash. However, history shows that leaving bonds out of the mix could be leaving investors exposed to the very risk they are looking to avoid.
Historical Context and Lessons Learned
Instead of focusing only on recent market trends, it is informative to review historical periods with similar monetary conditions, such as 1990, 2000, and 2008. These years began with flat yield curves and higher fed funds rates following previous tightening cycles. Comparing these periods to current conditions may be the key to building principal protection in a world of higher rates. The following is a summary of market environments prior to each S&P 500 pullback and the subsequent one- and three-year performance of cash, bonds, and the S&P 500.
1990 Backdrop:
2000 Backdrop:
2008 Backdrop:
As GW&K’s Global Strategist Bill Sterling points out, “In three major equity setbacks (1990, 2000, 2008), core bonds were positive over the next year and beat cash — and over three years they compounded while stocks were still digging out. T-bills yield about 3.9% (as of 9/30/2025) and a broad bond index yields about 4.4% with ~6 year rate sensitivity. If growth slows and the Fed makes more cuts, cash’s yield will reset lower, but high-quality bonds can appreciate and lock in today’s income. That’s why a stock/bond/cash mix typically diversifies better than cash and stocks alone.”
Key Takeaways
Principal protection involves more than simply holding cash: it means diversifying investments and monitoring that diversification as economic cycles change. And with stocks continuing to be an essential inflation hedge, it may be beneficial to remind investors of how the last 5 years might end up being the exception rather than the rule when it comes to cash providing more downside protection than bonds.
Our team of private wealth advisors can help you manage your assets and plan for the future. Our Private Wealth services include guidance on wealth transfer planning, lifestyle, and overall asset allocation. We encourage you to get in touch with us for more information about how we can help.
Mark Lewis, CFA, CFP®
Principal, Senior Wealth AdvisorDisclosures
GW&K is not authorized to provide tax, legal, or accounting advice. The information provided is for general informational purposes only and is not written or intended as an individualized recommendation or substitute for specific legal or tax advice, within the meaning of IRS Circular 230 or otherwise. Tax laws and regulations are complex and subject to change, which can materially impact investment results. The information contained herein is obtained from sources believed to be reliable, but its accuracy or completeness is not guaranteed. Individuals are encouraged to consult with a professional tax, legal or accounting advisor regarding their specific legal or tax situation