PFA Updates

Nov 19, 2024

Happy early Thanksgiving everyone! 

We are glad the election is behind us and the economy has continued to show resilience. 2024 is tracking as an exceptional year in the stock market. Historically, following a presidential election, markets typically move up through the presidential inauguration. [1] As always, we're hoping for a Santa Claus rally to carry us through to year-end. 

Our Investment Committee met this past week and reviewed economic indicators and performance. Our models continue to track well, measured against their benchmarks, even though PFA models hold less risk. We have no plans to change our allocations until early 2025 as we gain a clearer view of the new administration and 4th quarter earnings. We will reduce risk as appropriate. History is on our side; the economy remains resilient, and the Fed has indicated more interest rate cuts are coming so the general mood is positive. 

Below are a few year-end reminders and some interesting quotes pulled from market technicians.

Reminders

• If you have not completed your Required Minimum Distribution (RMD) from your IRA, expect a call/email from our team to process in the next 30 days.
• We have reviewed expected December capital gain distributions from mutual funds, and it appears they are tracking slightly higher than 2023, but should not have a significant tax impact in 2024
• We are viewing all client accounts, as we normally do in the 4th quarter, to harvest tax losses if possible
• If you are interested in a Roth IRA conversion this year and have not discussed this option with Dan or Tom, feel free to contact us.
• Because the markets have done so well in 2024, expect a noted increase in RMD’s for 2025…don’t panic, this is a positive impact.

Comments About the Markets and Economy

• “This is consistent with my long-term belief that a post-election rally would carry the markets to new highs into early 2025. I now expect to see the S&P 500 reach 6,200 to 6,300 by year-end 2024” [2]
• “Optimism for 2025 remains high. However, 58% of S&P 500 companies have lowered their earnings estimates after reporting 3Q 2024 results, and by a greater margin than they did three months ago. On the upside, this weakening trend is not severe enough to signal an imminent recession” [3]
• “It’s important to note that most S&P 500 companies have beaten expectations in previous quarters. In fact, the actual earnings growth rate for the index has exceeded the estimated earnings growth rate in 37 of the last 40 quarters” [4]
• “Consumers are spending, inflation is cooling, and the US economy looks as strong as ever.  The economy right now is firing on nearly all cylinders” [5]
• “Markets are nonpartisan. They have no bias or favoritism for one party or candidate versus another. And election results have not historically been notable market drivers. Growth, tends to be the decisive factor for the stock market” [6]
• “Comparing historical periods since 1962 – meaning periods when the Fed has cut rates, yet 10 yr rates have risen, and leading economic indicators have also been rising; the S&P500 has risen in 97% of subsequent 12-month periods” [7]

Keep the faith friends. Be well and let us know if we can answer any questions about your retirement plan or investment accounts. 

Sincerely,

Your PFA Investment Committee

[1] Bigcharts.com

[2] Chaikinanalytics.com

[3] earningsscout.com

[4] Invesco.com

[5] NYTimes.com

[6] fidelity.com

[7] fidelity.com