[Market Recap] Cup of Joe: May 2024 Market Update


Markets in May

  • Headlines have dominated the market the past two months and the week-to-week market direction has been manic.
  •  $10,000 invested in the S&P 500 in 1970 grew to over $2.6M at the end of March 2024, ignoring fees and taxes.  During that period of time:
    • From 1965 to 1981 the top marginal tax rate was 70%.  Only after 1987 did it come down under 40% where it has been since.
    • Interest rates were above effectively above 5% from 1972 to 1991.  Almost 20 years, during which the market was up almost 8x!
    • Price Corrections (a 10% decline in the index level) happen, on average, every 22 months.  We usually don’t even make it 2 years without a bumpy drawdown.
    • There have been 8 US recessions since 1970 an average of 1 every 6.6 years.
    • This period of time is littered with headlines both bad and good: terrorist attacks, war, natural disasters,  the birth of the personal computer, the fall of the Berlin Wall, and the invention of the iphone.  But the point is that the market perseveres.
  • We find ourselves in a time where things are generally ok… Equity markets are positive, US GDP growth is positive, unemployment rate is still really low.  We are just experiencing a lot of mixed signals which can sometimes be confusing and unsettling for investors.
  • Headlines cause short-term movements
    • 2023 was a great year but it wasn’t a straight line to +26%.
    • Also, when stock prices advance a lot, they take a breather.  And that’s what we saw with the market in April.
    • Think of headlines as tea leaves.  Don’t look at any one of them as the thing that’s going to change everything.
    • Staying invested is the most important thing you can do.



Joe Gallemore, CIMA®, Partner
Director of Investment Management


[Market Recap] Cup of Joe: April 2024 Market Update


Markets in April

  • March saw stock markets rise again with the S&P 500, NASDAQ, and DJIA indexes all closing Q1 at or near all-time highs. But there’s a lot going on underneath the surface.
  • A lot of economists and strategists have been predicting a slowdown in the US economy, instead it’s almost been the opposite of that. Many data points are coming in showing the US economy continues to be strong and resilient; at the same time the Fed is saying they will not cut interest rates before they are convinced of the inflation data.
  • This tug of war is causing persistent volatility week to week. And this past week, the S&P 500 had back to back days of 1% moves in opposite directions.
  • Nowadays the stock market is reacting to every little thing. The best thing to do is buckle your seatbelt and be patient. And in today’s stock market turbulence can come from a myriad of places. But as we’re seeing this year, even through pockets of volatility, the market will rise on positive news. And the labor market, US consumer, and economy at large have all remained unexpectedly strong.
  • Keep in mind that this stuff is impossible to predict. The market is sensitive right now and we think simply knowing that can help you stick to your investment plan, by not overreacting when the market over reacts.
  • Investing is hard, due in equal parts to 1) not knowing what’s going to happen, and 2) having to live with the uncertainty. Too many bad investment moves are made when an investor can’t calmly handle an emotional response to short term volatility and instead remain patient. And all volatility is short term.
  • So as the Macro landscape continues to change, if the market remains choppy, which we think it will, remain patient and confident. These environments typically present very good opportunities for active stock strategies and provide us good opportunities for rebalancing.


Joe Gallemore, CIMA®, Partner
Director of Investment Management


[Market Recap] Cup of Joe: March 2024 Market Update




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


[Market Recap] Cup of Joe: February 2024 Market Update



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


[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