2024 Third Quarter Commentary Report
Market Review
Global Market Performance
It would be an understatement to say the third quarter of 2024 was eventful. Assassination attempts and candidate changes in the presidential race, international elections, a major tech outage grounding flights, and the devastation of Hurricane Helene all added to the nonstop series of events. Global markets swung from record highs to extreme fear in August, only to close September at record highs again. Quickening economic growth and a surprisingly strong labor market have quieted any remaining recession fears for the time being. Overall, global stocks performed well. Both at home and abroad, small and large value stocks, which we tilt towards, outperformed the broader market as large growth stocks lagged.[i]
US Stocks: +6.23%
International Developed Stocks: +7.76%
Emerging Markets Stocks: +8.72%
Global Real Estate Stocks: +16.04%
Bond Markets
Inflation continued to move towards the Federal Reserve’s target rate of 2% which gave the Federal Reserve the confidence it needed to lower the Federal Fund’s rate for the first time in four years. While we welcome the resulting good performance of bonds and bond funds, we should note that money market rates are falling in line with the cuts. Past headwinds have indeed turned into today’s tailwinds.
US Bond Market: +5.20%
Global Bonds (excluding the US): +3.48%
We have long maintained that higher interest rates would benefit portfolios in the long term. Higher interest rates increased the expected returns of our bond investments and thus the overall expected returns of any balanced portfolio. Bonds now also have a greater ability to offset the volatility of stocks.
Political Influence on Markets
With the election coming up next month, we’d like to share with you an article published by our friends at Dimensional Fund Advisors. Just click here to read in full. Here are a few highlights:
“Data shows returns in election months have not tended to be that different from returns in any other month. When looking at a broad-market US index going back to 1926, the results don’t reflect any consistent pattern.”
“As Dimensional Founder and Chairman David Booth has said, “Vote with your ballot, not your life savings.” After all, the market isn’t a reflection of who gets elected president but of the efforts of companies to solve problems and provide goods and services. In the long run, innovation succeeds, no matter what politicians do.”
Planning Perspective
August was National Make-A-Will Month. If you didn’t know it, you are in good company. Less than half of adults in the U.S. have a will.[ii] We like to review estate plans periodically to make sure they are current and still facilitate what is desired. Here are some things to consider:
· Make sure all your documents are complete and organized and easily accessible by you and your agents or personal representatives.
· Make sure your agents are still capable, willing, and who you want to serve in that capacity.
· Estate laws change over time. Estate plans written more than ten or so years ago may need to be revised.
· Review beneficiary designations on all your accounts to ensure your desired ends are met.
If it has been a few years since you have reviewed your estate documents, we encourage you to do so.
Personal Perspective
The destruction of Hurricane Helene from the Gulf Coast of Florida to Western North Carolina is beyond words. Diane has a house in Western North Carolina, one of the hardest hit areas. While her house is fine, the community is devastated. She decided she had to do something. She drove up with a truckload of supplies to volunteer through her local fire department. She cleared roads, distributed supplies, and performed wellness checks on neighbors. We commend Diane for her resolve and efforts.
While time may be the most valuable thing we can offer, there are many ways to contribute in a meaningful way. Besides cash donations, we focus on two ways to facilitate charitable giving:
· Gifting appreciated stock allows one to take the charitable deduction as well as remove capital gain exposure from a portfolio. If it is an appreciated individual stock, it can also help to diversify a portfolio.
· For those who are retired, Qualified Charitable Distributions from an IRA may be the most effective option. The donor must be over 70 ½ years old. The gift goes straight from the IRA to the charity and counts towards one’s Required Minimum Distribution. The gift can be subtracted from your taxable IRA distribution instead of listed on itemized deductions. This way you can get a tax benefit for the gift and use the standard deduction.
Facilitating charitable donations is one of the more fulfilling parts of the work we do. We welcome any questions and welcome our volunteer firefighter back home.
Myles B. Brandt, M.S., CFP®
[i] Past performance is not a guarantee of future results. Indices are not available for direct investment. Index performance does not reflect the expenses associated with the management of an actual portfolio.
Market segment (index representation) as follows: US Stock Market (Russell 3000 Index), International Developed Stocks (MSCI World ex USA Index [net dividends]), Emerging Markets (MSCI Emerging Markets Index [net dividends]),
Global Real Estate (S&P Global REIT Index [net dividends]), US Bond Market (Bloomberg US Aggregate Bond Index), and Global Bond Market ex US (Bloomberg Global Aggregate ex-USD Bond Index [hedged to USD]). S&P data © 2024
S&P Dow Jones Indices LLC, a division of S&P Global. All rights reserved. Frank Russell Company is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes. MSCI data © MSCI 2024, all
rights reserved. Bloomberg data provided by Bloomberg.
[ii] https://news.gallup.com/poll/351500/how-many-americans-have-will.aspx