Trending Topics


This Month’s Trending Topics

Markets

Equity markets continue to move higher as anticipation for potential rate cuts remains front and center for many investors.  While the S&P 500 has made a new all-time high, it hasn’t been without moments of volatility to start the year.   The “Magnificent 7” which drove most of the returns in 2023 has started 2024 as the “Magnificent 5” with Apple and Tesla struggling. The other 5 continue to move higher and have contributed to the bulk of returns so far in 2024, similar to the pattern of 2023.   

Rate cuts will probably be the dominate investment theme for 2024, although the upcoming election may take some of the thunder.  Coming into 2024, markets were pricing in a near 100% certainty of a rate cut in March which pushed markets near all time highs.   Strong growth and employment data led the Federal Reserve’s Chair, Jerome Powell, to issue a statement indicating rates would stay higher for longer and a March rate cut was unlikely.  Equity markets initially sold off on this news and pushed the probability of a March cut down to 50%, but a June cut still at near 100%. Days later, markets seemed to shrug off this news on the back of good tech earnings as the S&P 500 moved to a new all time high.    

Only time will tell when, or if, the Fed will cut, but markets continue to grind higher on hopes multiple cuts will happen this year.   One thing that we have seen historically is markets rarely do a good job of predicting what the Fed will do, so further volatility should be expected if investors don’t get what they want or have to wait longer than expected. 

 

New Year

Many of us come into the new year with big and maybe even daunting goals that so many have already given up on by this time of year.   Whether it be to lose weight, exercise, save more money, spend time with the family, go back to school, earn accreditation to further a career or whatever it may be.  How can we do a better job of sticking with and accomplishing our goals?   A recently article from Carl Richards, financial advisor and creator of a website called The Behavior Gap, pointed out reasons we fail and some ways to be more successful.  

The problem usually isn’t the goals, it’s the way we go about trying to tackle them.  Most of us try to go big and burn out, forgetting that “slow and steady” often times wins the race.  The key is to break down these big and sometimes even scary goals into attainable pieces.  “What’s the next smallest thing I can do?” 

Rather than coming up with an elaborate exercise and healthy eating plan, just start with something.  Get up in the morning and put on workout clothes.  That’s it.  And maybe since you have workout clothes on, then you might decide to go for a walk or go to the gym.  Once you have exercised, you may feel the desire to eat something healthy given you don’t want to waste all of your hard work.   Research has found that these “micro-actions” can become contagious and lead to further “micro-actions”.  Rather than saying “I’m going to lose 10 pounds in 2 weeks” and becoming discouraged when that doesn’t happen, this “micro-action” strategy can produce better long-term results and a real change in lifestyle.  

If you are finding your 2024 goals unattainable, find ways to just “get started” as sometimes the working towards a goal can be more fulfilling than actually reaching the goal.

This can also translate into saving and investing.  We believe that slow and steady will win the race when it comes to investing and drastic moves can often times be detrimental to your investments and possibly even your mental well-being.  If you don’t feel you are saving enough, start small.  Bump up your retirement plan contributions 1%.  If you need to cut back on spending, start with removing one cost you can easily live without.  If you feel or want to take on more investment risk, bump up your current equity allocation by 1 or 2%.  Making a drastic move at the wrong time could cause more damage than good, especially if you end up bailing out and not sticking with it.      

If you go into each year wanting to “beat the market”, you may end up disappointed especially if all of your money isn’t in the “market”.  And when you want to “beat the market”, what does that mean to you?  What “market” are you trying to beat?  At the end of the day, you win if the sum of your resources exceeds the sum of your needs.  Find an allocation that allows you to win and also allows you to sleep at night. There will always be someone that is making more money than you. Focus on what’s important to you and what you need to live your life the way you’d like. 

 

This material is meant for general illustration and/or informational purposes only.  Views expressed in this newsletter may not reflect the views of Osaci Wealth, Inc.  It is our goal to help investors by identifying changing market conditions.  However, investors should be aware that no financial advisor can accurately predict all of the changes that may occur in the market.   This material should not be relied upon as investment advice.  Investors should note that there are risks inherent in all investments, such as fluctuations in investment principal.   There is no guarantee that a diversified portfolio will outperform a non-diversified portfolio in any given market environment. This article contains forward looking statements and projections.  Past performance is no guarantee of future results.  Neither Osaci Wealth, Inc nor its representatives provide tax or legal advice.  If you don’t wish to receive marketing emails from this sender, please reply to this email with the word REMOVE in the subject line.