Understanding Asset and Liability Reports in Divorce: A Guide to Empowered Decision-Making
more →[Market Recap] Cup of Joe: March 2024 Market Update
MARKETS IN MARCH
The connection between stocks & interest rates.
- Stocks have an inverse relationship with interest rates. When rates are rising, that is seen as a headwind for stock appreciation. And the opposite is true, when rates are falling that is typically good for stock prices.
- Further, interest rates almost always move in cycles. They trend one way and then trend the other way, like a pendulum. They don’t alternate in rapid succession.
- Now that rates have stopped moving the “bad” direction for stocks, and we’re waiting for them to start moving in the “good” direction, in our opinion there’s really only one thing that a long-term investor should be focused on, methodically moving cash or safety assets back into equities.
- Also, when interest rates are cut, not only is that a tailwind for stocks, but what happens to the savings rates on your cash? Those go down, too. So when probability tells you stocks should go up and savings rates should go down, what seems like the smart move?
We saw this relationship play out in the markets in February. Anticipation of the Fed’s first rate cut encouraged money to go back into risk assets.
- US stocks, small, mid and large alike, were up about 5% in the month. And Emerging Markets were also up almost 5% as well.
- The boost in stocks, however, seemed to be at the expense of bonds, which dipped about -1.4% in February. However, with many bonds and bond funds still yielding over 4% and the expectation of multiple interest rate cutes this year, the return outlook for bonds is positive.
Highlighting a couple of law changes in 2024:
- Gift Exclusion Limit was raised from $17,000 to $18,000. This means you can gift $18,000 of cash or securities to someone without reducing the amount you can pass along tax-free in your Estate.
- The contribution limits on all kinds of Retirement plans also went up this year. The most widely used would be accounts like 401Ks & 403Bs (this includes Thrift Savings Plans). The contribution limit on these went up to $23,000 for 2024. Other types of accounts such as Regular & Roth IRAs, SEP IRAs, SIMPLE IRAs all had contribution limits go up this year. As did the catch-up contribution amount you folks over 50. So be sure to ask your advisor or tax preparer if you can take advantage of these increases.
Joe Gallemore, CIMA®, Partner
Director of Investment Management
Divorce Financial Planning Services Offered by Argent Bridge Our team of Certified
more →[Market Recap] Cup of Joe: February 2024 Market Update
MARKETS IN JANUARY
Asset classes were mixed in January. US large cap and Intl stocks were slightly positive, while mid and small cap stocks gave back some gains from Q4. Bonds held steady close to even with an income yield still above 4%.
Economy seemingly on good footing
Economic output is strong. GDP exceeded expectations for both Q4 and 2023.
Employment is staying strong as well. Jobs Data far exceeding Wall St expectations. Economy has added over 750,000 jobs in the last two months.
What the Fed is watching is close to the range they want. Fed’s preferred inflation measure is starting to stabilize near a level they’ve been targeting.
Let’s greet this positive data with cautious optimism. There are still many cross-currents moving beneath the surface of the stock indexes that signal a slowdown is still very much a possibility.
Managers of the strategies we use like to focus on quality companies that manage debt well, have competitive advantages in their business models, and have resilient streams of cash flow. So in an environment where interest rates are higher and consumer spending may slow down, owning businesses with very strong fundamentals is a great position from which to start.
What do we focus on now?
Putting cash to work
MMKT funds are very short-term vehicles and are among the first things to lower payouts rates when the Fed eventually cuts interest rates.
The Fed doesn’t even need to cut rates for the payout to decrease. The expectation of rate cuts starts to get baked into the prices in the short term bond market and will start weighing on the yield of your savings accounts.
Rebalancing your investment accounts
We’ve been rebalancing the assets we over see for you.
If you got more conservative in your 401K, 403B, or Thrift Savings account, don’t forget about it and let it sit there. Make sure to rebalance it back to your long-term target allocation.
Still expect volatility. And along with that, expect some of the unexpected.
Now is the time to be disciplined investors, and be comfortable with some uncertainty, while keeping your eyes on the growth to be had once things really improve.
Joe Gallemore, CIMA®, Partner
Director of Investment Management
Navigating Divorce with Grace: Harnessing Conflict Coaching for Effective Resolution Divorce is
more →[Market Recap] Cup of Joe: January 2024 Market Update
Well 2023 is history, and what an interesting year it was.
- Wall St started the year with an overwhelming consensus that recession was imminent.
- The Fed hiked rates 4 times this past year but has paused since August.
- The S&P 500 ended the year with the Top 10 names accounting for 32% of the index! And were responsible for 86% of the return (according to JPMorgan).
Review of 2023
- Hot out of the gate: Fed ended 2022 with its first decline in rate hikes, so investors started looking farther down the road.
- Regional Banking ‘crisis’: Lasted about 5-6 weeks
- Spring/Summer acceleration: Lead to a Frothy market, where stock prices were way ahead of fundamentals.
- 3 Month Lull: the economic data started to catch up and suggest that risk of recession was still substantial. The Fed first paused rate hikes and started talking about keeping rates higher for longer.
- Nov/Dec Rally: Persistently positive economic data continued to roll in and the equity and bond indexes reaccelerated sharply. The big distinguisher this time though, is that the rally was seen across the board, not just in a handful of stocks.
- Summary: There were 5 main segments to market performance last year but each one was peppered with sharp reversals in the direction it was trending at the time. These relatively short pockets of volatility can feel unnerving, they are confusing, and they invite doubt as to whether changes to the plan need to be made.
What’s ahead in 2024? No one knows, so stay invested!
- Recession is still possible but is less likely than before. Opinion on market return varies widely. No one predicted a 2023 of +26% containing a -10% drawdown and the 2nd, 3rd, and 4th biggest bank failures in US history.
- If inflation continues to stabilize, its expected that the Fed will start cutting rates in small increments. This would be a big positive for markets and the economy. But rate cuts are not promised and there are several factors that could cause the Fed to pause for longer.
One key thing is to stay invested.
- Even if the Fed is in wait and see mode, the market will likely operate in fits & starts as the economy tries to get going again.
- Geo-political tension is high right now. If these tensions were to take sharp turns, it indeed may cause the market to hiccup. One thing that’s a fact is that markets persevere through geopolitical events.
- The Fed may be done raising rates. Unexpected fallout from high rates may reel its ugly head again. External events, totally out of the blue, might pop up as they always seem to do.
- This is just a friendly reminder to stay the course no matter what. Missing only a few days of good returns can significantly affect your long term outcome. Staying invested is always the way to go.
Principles for 2024
- Have another look at your company retirement plan and share details with your advisor. How much you contribute and when(!) can make a big difference.
- Don’t jump to make investment changes. A calendar year turnover is a psychological trap when it comes to your portfolio. Investing exists on a continuum, which moves in cycles. We did rebalance portfolios twice in Q4 to position for the road ahead.
- Reminder, IRA contributions for 2023 can be made up until you file taxes. So if you haven’t done that, you maybe still can. If you’re unsure about eligibility, ask us.
- Savings rates are great now, but these are not expected to last forever; and yields on money market funds are the first to decline when the rate cycle turns over. So lets get together and strategize about putting excess cash to work in a more sustainable plan.
Joe Gallemore, CIMA®, Partner
Director of Investment Management
Understanding Property Classification in Divorce Property classification forms the cornerstone of equitable
more →[Market Recap] Cup of Joe: December Market Update
1. 2023 has generally been a good year for equities, but be mindful of index concentration
2. Great time to be diversified
So though a prudently balanced portfolio has faced challenges in recent years, the current outlook for diversification looks promising.
3. Takeaways from our Investment Committee
Joe Gallemore, CIMA®, Partner
Mortgage Options in Divorce Divorce is a complex process that often involves
more →[Market Recap] Cup of Joe: November Market Update
Recent Investment Focus webinar with the St James Investment Co.
We talked about how interest rates affect stocks, about the Magnificent 7 making the S&P 500 more concentrated than it’s ever been, and we talked about St James’ patient, time-tested approach to value investing and how owning great businesses helps clients in the long-term. Watch at your convenience at ArgentBridge.com.
Financial Planning Year-End Punch List – a few things you can do to help you work towards better outcomes
- Assess any changes – Make a list and bounce it off your advisor.
- Give your taxes a little thought – if you got/are getting a good bonus, made more than you thought, had some windfall income, let your advisor know.
- Review your budget for accuracy – Leads to better planning for the future
- Make sure your company retirement plans are fully funded!/li>
- Charitable giving – If you want to gift, to charity or loved ones, tell your advisor! There’s lots of giving strategies out there and we want to help you make the most of your generosity.
- Year-end not necessarily a time to shuffle your investments. Historically the months in Q4 and Q1 are relatively strong. Make that discussion a year-round one with Argent Bridge.
- I-Bonds – Is it worth owning?
- I-bonds purchased in the last few years may be less competitive than current US Treasuries that can be locked in.
Each I-bond is different and the time it was purchased and the length it’s been held needs to be considered.
If you have I-bonds, show them to your advisor, let us take a look and see if there’s a way we can improve your outcome. - Focus on your spending- Maintaining your normal spending plan, when funded by distributions from your investments, eats up bigger chunks of your assets when the markets decline. So adjusting your spending is a great way to improve your investing outcome.Thank you for your continued trust and partnership.
Joe Gallemore, CIMA®, Partner