Q1-2024 Client Commentary
April 16, 2024
Stock investing proved rewarding in the first three months of 2024, with notable performances across all the major indices. The S&P 500, which is dominated by seven large companies (Microsoft, Apple, Nvidia, Amazon, Meta (formerly Facebook), Alphabet (formerly Google), and the volatile Tesla) tallied a 10% return, while the technology-laden NASDAQ advanced 9%. Additionally, the traditional thirty company Dow Jones Industrial Average and international EAFE index both saw a respectable 5% rise. In general, your individual portfolios beat those respective indexes depending on your customized individual asset allocation.
Amidst this positive market trend, sticky inflation numbers tempered enthusiasm for dramatic Federal Reserve action, leading to a rise of more than a quarter percent in government interest rates for maturities over a year. We personally are forecasting that the chatter narrative on interest rates cuts will be much delayed for the future, for the U.S. economy is now relatively strong with current interest rates.
Amidst discussions following the significant recovery of large-cap technology stocks last year, it has been suggested that investors should seek out investments that have not participated in the rise over the past decade. Notably, these investments fall into categories referred to as value stocks, small-cap stocks, or international stocks. We however believe grouping in these dated categories is more 1990’s based on not reflective of the modern world.
At our firm, Nathan and Tom Plumb recognize the influence of momentum and sentiment on market volatility and short-term swings. Nonetheless, we firmly believe that fundamentals are the cornerstone of long-term value. We understand that a range of factors such as interest rates, government policies, inflation, technological innovation, consumer sentiment, shortages, and surpluses contribute to the investment environment, shaping the performance of different investments.
Furthermore, we believe that companies achieving top market positions do so through innovation, execution, and sound business principles. Our focus lies in meticulously analyzing individual investments to identify their specific merits within the prevailing environment. For clients whose needs aren't met by individual stocks and bonds, we offer mutual funds that reflect our strategic approach and portfolio management expertise.
While many wealth management firms prioritize their macro view of markets and asset allocation, often defining success by matching wholesale investment allocation models with diversified market volatility, we take a different approach. We prioritize delivering significantly better long-term results for our clients and mutual fund shareholders. For instance, an investor who entrusted $100,000 to our balanced fund a decade ago now sees $50,000 more in their account compared to a typical investor with a similar mix of stocks and bonds.
Our commitment remains steadfast in focusing on the key factors that have contributed to your past success as we endeavor to build your future prosperity.
Warm regards,
Opinions expressed are those of the author and are subject to change, are not intended to be a forecast of future events, a guarantee of future results, nor investment advice. References to other mutual funds should not be interpreted as an offer of these securities.
Earnings Growth is not a measure of a securities’ future performance.
It is not possible to invest directly in an index.
The Dow Jones Industrial Average (DJIA) is a stock market index that tracks 30 large, publicly-owned blue-chip companies trading on the New York Stock Exchange (NYSE) and Nasdaq.
The MSCI EAFE Index is a stock market index that measures the performance of large- and mid-cap companies across 21 developed markets countries around the world. Canada and the USA are not included. EAFE is an acronym that stands for Europe, Australasia, and the Far East.
The Standard and Poor's 500, or simply the S&P 500, is a stock market index tracking the stock performance of 500 of the largest companies listed on stock exchanges in the United States. The Nasdaq Stock Market is an American stock exchange based in New York City. It is the most active stock trading venue in the U.S. by volume and ranked second on the list of stock exchanges by market capitalization of shares traded, behind the New York Stock Exchange.