Happy Friday! I have been traveling all week, spending some time on the West Coast seeing clients and attending a conference held by our broker dealer. I always appreciate the opportunity to see clients and peers in person. While Zoom, phone calls and emails work perfectly fine, nothing replaces the time spent connecting outside of our digitized world! I’m sure many of you often feel the same. The other good thing about getting on the road is seeing firsthand how different parts of our country are managing through the current environment and expectations for moving forward. I have been fortunate to see and speak with many of our clients already this year. What is interesting to me is that even in the face of a recovering and strong stock market and relief that the Federal Reserve is likely done raising interest rates, there remains a general feeling of “angst” among many. This seems puzzling considering our current economic state where we have steady and low unemployment, falling inflationary data, and a Federal Reserve likely to cut rates in the future not raise them, yet there remains lingering skepticism about the path ahead. I can understand these feelings. With an unprecedented election cycle now playing out and ongoing conflicts in many parts of our world, some feelings of uncertainty are to be expected.
I was encouraged this week by several of the meetings and seminars I attended. I also had the opportunity to listen to two well-respected economists and money managers detail their views on the current environment and what is likely to occur in the year ahead. There are some common themes to share:
- Election cycle years tend to be positive years with the S&P 500 averaging 7% returns since 1952 (that a lot of history to reflect upon!).
- The Federal Reserve is more likely to cut rates 2-3 times later this year, not the 6 or more times that many people had been anticipating.
- Diversification – A well-rounded investment portfolio should help to calm any big volatile swings we see over the year.
- Interest rates – money markets and treasuries have performed well over the last 18 months but moving to longer duration holdings should be considered before rate cuts begin.
- Do nothing! The Fed is telling us that precisely right now. With low unemployment and inflation continuing to fall, the “hold steady” mantra is loud and clear at the moment.
- There is still little evidence pointing to a recession coming in the year ahead. But, if one were to occur, it would likely be mild in nature, maybe a quarter or two, and the Fed has plenty of dry powder to cut rates at this point to get things back on track.
There are a lot of things to consider in these bullet points, but important to keep these things in mind as we navigate the twists and turns that 2024 will likely bring.
As I board my plane back to Maryland today, I will be considering all of the information I have been imparted with this week. As I think about these things, I always go back to the “plan” we have created individually and collectively. At the crux of all the meetings and discussions I had with my peers and others, the planning piece was the main focus. A well-balanced, risk-managed investment plan can weather the long-term. Yes, we will have twists and turns. This year will provide plenty of those for sure. Staying on track with realistic goals while adjusting as needed is simply part of the journey. That’s why we are here as your trusted advisors, to help you stick to your “plan” and adjust the plan when needed. Enjoy the big game and have a nice weekend.
Christopher E. Wasson, CFP®
Mosaic Asset Partners, LLC
1122 Kenilworth Drive, Suite 310
Towson, MD 21204
410.821.0089 fax 410.821.5993
Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Mosaic Asset Partners, LLC is not affiliated with Kestra IS or Kestra AS. Investor Disclosures: https://www.kestrafinancial.com/disclosures
The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra IS or Kestra AS. The material is for informational purposes only. It represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. It is not guaranteed by Kestra IS or Kestra AS for accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security.