2024 Mid-Year Update
We hope this message finds you well. The past month has been a whirlwind of events, from political debates to heightened conflicts in Ukraine and Israel, as well as recent fluctuations in the stock market. It’s understandable such times can cause concern, but we want to reassure you that we are closely monitoring these developments and are here to support you every step of the way.
Market Outlook and Our Approach
Recent market activity has prompted some de-risking across the globe, and we are paying close attention to the situation, particularly in Japan. Despite these challenges, we see this as an opportunity to evaluate and adjust our strategies to ensure your portfolio remains strong and resilient.
We’ve been carefully reviewing your investments, selling some positions while seeking new opportunities that present good value. Our goal is to navigate through the volatility with a steady hand, ensuring your financial objectives are met.
Understanding Market Dynamics
Market fluctuations are a natural part of investing, and while the recent events have been dramatic, they also present opportunities for growth and adjustment. We are consulting with our network of experts and drawing from a wealth of experience to make informed decisions that align with your long-term goals. While there is a lot of noise and differing opinions about the future, our focus remains on what we can control: managing risk, capitalizing on opportunities, and maintaining a diversified approach to protect your investments.
Timeless Truths of Wealth Management
As wealth advisors, we are long-term, goal-focused, plan-driven investors. The past three years have shown predicting the economy and markets is impossible. Our strategy has been to stay steady, ignore the noise, and focus on your long-term goals.
We believe in riding out temporary declines so that, later, we can enjoy the compounding growth of equities.
Historical data shows staying invested is much better than trying to time the market or adjust strategy based on political events. Use the QR codes below to watch two short videos:
Current Commentary
Here's a brief update on the first six months of 2024:
The U.S. economy grew modestly, and the equity market did well, driven by earnings growth and rising dividends. However, we believe the markets are relying too much on the technology sector.
Economic growth stayed positive, avoided recession, and had solid job growth. Inflation slowed slightly, without immediate need for the Federal Reserve to cut interest rates. We do see a high probability of rate cuts beginning in the second half of 2024.
Monetary policy remains gently restrictive, with interest rates above the inflation rate suitable for long-term investors. Reducing inflation to the Fed’s 2% target is still a priority, but many are concerned the only way to get there is by triggering a recession.
The equity market advanced, with significant stock indexes reaching new highs, driven by solid earnings and rising dividends. Bloomberg estimates that S&P 500 earnings will grow 8.8% this year and 13.6% next year.
Despite record-high dividend payments, S&P 500 companies are still paying out less of their earnings compared to the 30-year average, indicating room for further dividend growth. We believe a tilt towards value stocks is beginning.
Earnings and dividends are the variables that ultimately drive the long-term value of our core investment asset: ownership in a broadly diversified portfolio of consistently successful companies. Not the national debt, the looming election, the presence – or absence – of federal rate cuts, wars, not the onset of the next regularly scheduled government shutdown “crisis.”
We believe the more we focus on the fundamental strengths of our core asset combined with tuning out the noise, the less danger we will have of an emotional overreaction to gyrations in “the stock market.”
We believe in our investment plan and the financial plans we’ve built for you.
A Balanced Perspective on the Federal Reserve
Regarding calls for the Federal Reserve to act quickly, we believe that measured responses are essential. The Fed’s recent report provides a solid foundation, and it’s crucial for market dynamics to evolve naturally. Over-reliance on intervention can create imbalances, and we believe in the resilience of the market and companies to find their footing.
While the current landscape is complex, we are confident in our ability to navigate it effectively. Our commitment to you is unwavering, and we are here to provide guidance, insights, and support as we move forward together.
Looking Ahead with Confidence
You may be looking at the upcoming election as a gauge to your plan's success. We’re here to discuss your strategy and ensure it's aligned with your family's goals. The feedback we received during Covid and our merger with intellicents has been invaluable. We’re grateful for our relationship with you.
As a team, we continuously improve our framework to deliver exceptional value. We challenge conventional wisdom and simplify wealth management so you understand your plan, and are committed to your plan’s success. We believe in transforming business success into personal wealth, as well as partnering with driven entrepreneurs and families who aspire to make work optional and give back to their communities.
Please feel free to reach out if you have any questions or need further clarification on any aspect of your financial plan. Your financial well-being is our top priority, and we are dedicated to ensuring your success.
Thank you for being our client. It's a privilege to serve you.
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