At Members’ Wealth as we prepare to wrap up the year, it's an opportune moment to reflect on where we stand and although far from clairvoyant, we look into where we are now and where we could be heading for 2024. Our process is one that includes a lot of reading. We seek optimistic and pessimistic viewpoints to gauge investor sentiment. We laboriously read facts to make our own assessments and we look to history as a guide to help us overcome biases. In one recent insight shared by Madison Faller, Global Investment Strategist at J.P. Morgan, in her article, "Is the coast clear? Investing amid the rally," dated November 17, 2023, Faller brings an optimistic perspective as we stand on the brink of a new year. Elements of which we echo in our messaging to clients of Members’ Wealth and summarize and share below.

A Glimpse of Economic Optimism

November 2023 is shaping up to be a remarkable month, possibly the best of the year. The S&P 500 has witnessed a significant 7.5% rise this month, nearing a 20% increase year-to-date. This upliftment is a result of the cooling yield surge, with 10-year Treasury yields plummeting and U.S. core bonds recovering their losses for the year. This is a far cry from the despair we seemed to be experiencing just a short one month ago.

What we want Members’ Wealth Investors to think about:

1. Economic Balance: The U.S. economy is cooling, but not excessively. Consumer spending has slowed yet remains robust in various sectors, signaling a potential soft landing. Never a certainty for sure, but probable.
2. Inflation Trends: Inflation is showing signs of deceleration, with both headline and core Consumer Price Index (CPI) figures easing more than expected. This indicates a promising shift, though vigilance is still required. But here at Members’ Wealth we fear deflation more than inflation so we like to see inflation in check but are mindful of the Fed and other circumstances pressing the brakes too hard.
3. Fed Rate Hike Outlook: The likelihood of further Federal Reserve rate hikes has diminished, pointing towards a stabilizing economic scenario. Higher for longer or a new normal for rates is welcomed. Personally, we would like to see a 2024 with no change in rates at all. No cutting, no lifting.

How should investors think about investment opportunities?

The stock market has rallied significantly from its lows and there is no doubt that investing near market highs might seem daunting, but historical trends suggest that such times have still offered strong returns. See Graph below.

In summary, historically future returns after a rally like the one we have experienced is followed by further upward trajectory in the equity markets. Not guaranteed, but probable.

Bonds: A Potential Opportunity

Perhaps most exciting to us, despite the recent rally, relative to the last 15 years, bond yields remain at attractive levels, presenting an opportunity for investors. This could be a pivotal moment for multi-asset investors, offering potential for income and diversification. We continue to see opportunities across the bond universe. If you do not know your bond positioning, Call us!

Reflection and Action

As we approach the end of the year, it's crucial to reassess the alignment of your investments with your financial goals and aspirations. We look forward to our year-end and beginning-of-the-year meetings with investors. In the meantime, if you notice some trading, it is us taking action to rebalance toward opportunity. And if you have questions before your next meeting, please let us know. (If you are not yet a client and want help designing your financial plan for your family for 2024 and beyond, please reach out.)

In summary, as we move forward, let's embrace the opportunities that lie ahead with optimism and strategic foresight. Here's to ending the year on a high note and preparing for a prosperous future!

The S&P 500 index is designed to be a broad based unmanaged leading indicator of U.S. equities and is meant to reflect the risk/return characteristics of the large cap universe or representative of the equity market in general. This index does not reflect the deduction of any fees. It is not available for direct investment. Exposure to an asset class represented by an index is available through investable instruments based on that index.

The charts are for illustrative purposes only and do not take into account your particular investment objectives, financial situation or needs and may not be suitable for all investors. It is not intended to project the performance of any specific investment and is not a solicitation or recommendation of any investment strategy.

About the Author – Dane Czaplicki, CFA®

Dane Czaplicki is CEO of Members’ Wealth, a boutique wealth management firm that offers a comprehensive approach to serving individuals, families, business owners, and institutions. The firm’s goal is to preserve and grow its clients’ wealth to endure over time, while thoughtfully evolving its strategy to suit an ever-changing world. With over 20 years of wealth management experience, Dane and the Members' Wealth team thrive on bringing clarity and confidence to clients' unique situations. He believes everyone needs sound financial advice from someone whose interests are aligned with theirs, and is determined to put service before all else.

Dane received his MBA from The Wharton School of Business at the University of Pennsylvania and his bachelor’s degree from Bloomsburg University. Outside work, he enjoys spending time with his wife and kids, hiking and camping, reading, running, and playing with his dog. To learn more about Dane, connect with him on LinkedIn.

To get in touch with the Members’ Wealth team today, I invite you to email info@memberswealthllc.com or call (267) 367-5453. 

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