One of the greatest virtues a wealth manager can have is patience. In 2022, I had a lot of clients calling me worried about the bear market. I counseled most people to just wait it out – the market goes down, but it almost always goes up again.
I’m glad to say that patience is paying off. For 2022 and most of 2023, the market was extremely volatile, changing what felt like hourly. That volatility has calmed down, and we are on an upswing.
March 31, 2024 Investment Index Examples
| Index | Performance |
| Bloomberg 1-3 Year Treasury Index | +0.5% |
| U.S. Quality Bonds (Bloomberg Aggregate) | -0.8% |
| Small/mid U.S. Stocks (Russell 2000) | +5.2% |
| MSCI All Country Word Index | +8.3% |
| Large U.S. Stocks (S&P 500) | +10.6% |
Further good news is that the rally has broadened into the stodgier, dividend-paying stocks, represented in part by the Dow Jones Industrial Average, and into smaller stocks. This supports our belief that we are experiencing a healthy rally with strong underpinnings.
Six-month performance as of March 31, 2024
| Stock Type | % Change |
| Stodgier, dividend-paying stocks (Dow Jones Industrial Avg) | +18% |
| Smaller stocks (Russell 2000) | +17% |
| High Flying tech stocks (S&P 500) | + 22% |
We believe one of the factors for this rally is the investment markets’ apparent patience with the Federal Reserve Board’s potential slower-than-expected interest rate cuts. Our sense is that many market participants hoped for six rate cuts at the beginning of 2024 and now are thinking they may get three – yet values keep going up. To us this indicates investment market support for the Fed’s continued focus on restraining inflation.
Upcoming Predictions
While markets seem more stable now, we expect volatility to ramp up as the presidential election gets closer. We are likely to see this volatility start in July, but we are watching closely and are ready to jump in and buy on your behalf should bargains materialize. At this time, we are anticipating a rebound after the election because markets have historically liked increased certainty, even if the elected official is not their top choice.
India
We are now closely watching India for an entry point. As a currently popular investment destination, the Indian stock market has run up. However, we believe long-term potential exists due to India’s strong economic growth. At the moment, the economy is benefiting from both the movement of business out of China and positive demographic trends (meaning: lots of young people). In June 2023, India surpassed China as the most populous nation, with 1.486 billion people (5x the U.S. population). Populations with more young people have a larger workforce and generally stronger economic growth.
Tax Planning Is Available
Did you know that tax planning tops the wish list for clients of advisory firms like ours, with 90% of clients wanting this service? The good news is, we offer this service as suitable!
There’s a lot to know about taxes, like tax rates scheduled to increase in 2026 and strategies to reduce tax through tactics like Roth conversions, charitable planning, retirement plan contributions, pulling income into one year or pushing it into next and more.
As a CPA with a Masters in Tax, I have long paid attention to these strategies on clients’ behalf. Now Mallory Kretman co-leads the tax planning charge. She participates in regular tax strategy updates through our tax planning partner, Holistiplan, and writes our blog posts about tax reduction.
References
- All index data from Envestnet Tamarac application except for the following, which is from Yahoo Finance: Dow Jones Industrial Average; iShares MSCI China ETF and iShares Japan ETF.
Index Definitions
- Bloomberg 1-3 Year Treasury Index: Measures the performance of the US government bond market and includes public obligations of the U.S. Treasury with a maturity between 1 and up to (but not including) 3 years.
- Bloomberg U.S. Aggregate Bond Market Index: A representation of SEC-registered, taxable, and dollar denominated securities. The index covers the U.S. investment grade fixed rate bond market, with index components for asset-backed securities, government and corporate securities, and mortgage pass-through securities. Must be rated investment grade (Baa3/BBB- or higher) by at least two of the following rating agencies: Moody’s, S&P, Fitch; regardless of call features have at least one year to final maturity and have an outstanding par value amount of at least $250 million.
- Russell 2000 Index: The index measures the performance of the small-cap segment of the US equity universe. It is a subset of the Russell 3000 and includes approximately 2000 of the smallest securities based on a combination of their market cap and current index membership.
- MSCI All Country World Index: A stock index designed to provide a broad measure of global (U.S. and international) performance. It comprises nearly 3,000 companies from 23 developed countries and 24 emerging markets companies as of Dec 29, 2023 (per Investopedia).
- S&P 500 Composite: Representing approximately 80% of the investable U.S. equity market, the S&P 500 measures changes in stock market conditions based on the average performance of 500 widely held common stocks. It is a market-weighted index calculated on a total return basis with dividend reinvested.
- Dow Jones Industrial Average: Tracks 30 large, publicly owned blue-chip companies trading on the New York Stock Exchange and Nasdaq.
Laura, the founder of LWP, is a Senior Wealth Manager, Chief Investment Officer and Shareholder. She has a master’s degree in tax and is an excellent listener. While she is a sophisticated financial planner with experience in complex issues, her priority is ensuring a financial plan works for people.
