PFA Updates

Dec 27, 2024

Hello friends,

There have been lots of cheers as many US stock indices continue to close at record highs.[1] No one knows how long this can last, but it helps to brighten the holiday season. We keep telling clients to enjoy the ride, because we all know some day in the future, the markets will struggle and have a negative year. For now, strong corporate profits, low unemployment, and record consumer spending help to keep the US economy on a growth path. [2] Historically, markets “melt up” to the Presidential Inauguration Day, and then it’s after the new administration is in office that we can assess what the future holds. [3]

Our Investment Committee met last week to review the economy, markets, and investment model performance. Our investment models continue to outpace their comparative indices year to date, and we have no short-term strategy changes at this time. We do have some longer-term concerns about the economy and markets, so we have had early discussions of how we might reduce risk when the time comes. As we watch another year wrap up, we are staying positive and hope you are too. Below are a few quotes of interest:

• “Seasonal factors fall away in January, just as economic/policy uncertainty may increase as Trump takes office. That’s when the stock market may begin to struggle, as would be normal in the weeks following Inauguration Day. Until then, the stock market could be stronger than many expect.” [4]
• “I still expect to see the S&P 500 reach a range of 6,200 to 6,300 by year end 2024…with more upside ahead in 2025”.[5]
• “The Magnificent Seven now account for 32% of the S&P 500 – a significant concentration risk that’s largely being overlooked, as most risks are often ignored during strong market rallies.  Through year-end, it’s hard to see what could disrupt this melt up.” [6]

Keep the faith friends. Have a wonderful holiday season. Let us know if we can answer any questions about your financial plan or investment strategy.

Sincerely,

Your PFA Investment Committee

[1] marketwatch.com

[2] fidelity.com

[3] CNBC.com

[4] morningstar.com

[5] chaikinanalytics.com

[6] earningsscout.com