Broker Check

Q1 2024

April 04, 2024

1st Quarter 2024 Review                                                                                                               April 4, 2024

 

Dear Awesome Clients and Friends,

Happy Spring Break and Easter to all our valued clients and friends! May this season bring you renewal, and quality time with your loved ones. Personally, looking forward to Spring Avon Lake High School track meets, drama plays, and attending high school graduation for my twin daughters! Wow, where did the time go?

2024- A Great Start in the Markets!

As of this writing the market is on track for a great ending to the first quarter. On the heels of a 25% gain for the S&P 500 last year, stocks are up about 10% already in 2024. The logical question is, how much is too much? Well, maybe just a little bit more could be in store for the bulls.

The S&P 500 is up 17 of the past 21 weeks and up 27% over that timeframe. The good news? More gains could be coming. According to Ryan Detrick, Chief Market Strategist for Carson Group Research, there were six other periods where stocks gained at least 25% in 21 weeks, and sure enough, stocks were higher a year later each time with an average return of more than 21%. (Source: Carson Group Research. Past performance is no indication of future results; investing involves risk.)

One of the all-time greatest investors of our lifetime, Warren Buffett may have said it best: “The stock market is a device to transfer money from the impatient to the patient.” Let us not get too excited or impatient now after a great run. Some volatility or correction is bound to happen, but this year should continue to be positive (see table below).

 


What about interest rates, the Economy, and the Election?

The balance of 2024 should be full of intrigue (for us financial nerds) and politicos. When will the Fed lower rates? Will the economy stay strong or slow to a recession? What about the election – a rematch of Biden vs. Trump?

The Federal Reserve (Fed) left rates unchanged at their March meeting, but the headline was that the median official continues to project three interest rate cuts in 2024, each worth 0.25%-points. Going into this meeting, a big question was whether Fed members would lower that projection to just two cuts in their summary of economic projections (the “dot plot”). Keep in mind that even two cuts for an economy that’s running strong is a nice tailwind for growth.

But there was concern that the Fed would signal a big shift in their thinking, spooked by two months of relatively hot inflation data. However, Fed Chair Powell pointed out that they’re not “overreacting” to recent data, just as they didn’t overreact to the soft inflation data over the prior six months. He stressed that the overall story remains the same: inflation is trending down along a bumpy path.

Source: Charles Schwab, Bloomberg, Federal Reserve, 1929-3/15/2024

 

Aside from Fed policy, the other significant uncertainty this year surrounds the November elections. There are so many ways to slice and dice stock market behavior around election outcome.

The chart below sends the most appropriate message for investors who think trading around election outcomes makes sense. Covering the modern period for the S&P 500, investing only when a Republican was in the White House, a $10K initial investment in 1961 would have grown to more than $102K by 2023. On the other hand, the same $10K initial investment would have grown to more than $500K, investing only when a Democrat was in the White House. Some might stop the analysis there and conclude that staying out under Republican presidents and being in under Democratic presidents is a winning strategy. But the real moral of the story is told with the final bar. The same $10K initially invested in 1961 would have grown to more than $5.1M by just staying invested, without regard for the political party in power. The message: It’s the dynamics of our economy and the productiveness of American workers that make the market- not Presidents. Presidents come and go but companies persevere and produce profits and long-term value. Stay invested!

  

Using AI (Actual Intelligence) and Personal Service

We continue to prioritize high-quality, low-cost investment models and strategies that are consistent with long-term success. We will continue to watch interest rates and opportunities in bonds and diversification in stocks.

Let us know how your taxes come out this Spring and let's plan on ways to mitigate and save taxes for 2024. Feel welcome to call us and remember to bring your tax return when you come in for your Review. Each day that comes presents something new and exciting both for you and the people in your life. Make it the best you can with gratitude, abundance, and love. Your support and trust empower us to innovate and excel, and for that, we extend our sincerest gratitude.

It is my singular focus to provide the advice, performance, and personalized service you can depend on to build financial security.  It is my honor and privilege to serve you and your family, and we look forward to seeing you soon!

Sincerely,

 

Jim Elios and Team

The information presented in this newsletter is the opinion of Elios Financial Group, Inc. and does not reflect the view of any other person or entity.  The information provided is believed to be from reliable sources, but no liability is accepted for any inaccuracies.  This is for information purposes and should not be construed as an investment recommendation.  Past performance is no guarantee of future performance.  Elios Financial Group, Inc. is an investment adviser registered with the U.S. Securities and Exchange Commission.