As always, I want to thank you for being such great clients and friends. A special shout out to those that have helped me raise new assets, for the new investments from existing clients and for referring friends and loved ones. Thank you.
It is now early January 2025, and we have had 2 good years in a row for the stock market, especially the S&P 500 and Nasdaq indexes. The economy is strong but less strong than we saw at its peak. The labor market is strong although weakening, causing some degree of worry for the Federal Reserve (the Fed). Inflation is lower than it was last year and much lower than the year before, but it is not at the Fed’s desired level (2%) and potentially becoming harder to reduce from here which is also causing concern for the Fed. The Fed has cut rates, but future cuts and the number of cuts is in question. Europe and Asia are facing difficult economic times and money is flowing into the US which for now is pushing the dollar higher, which is a challenge for multinational companies. There is hope that regulation will be relaxed, tax rates will come down and there will be other potential tail winds for the stock market provided by the new administration. The mention of large tariffs by our President elect could prove inflationary which is a head wind for the stock market and could be the start of several significant trade wars. Lastly, earnings have been very good, but valuations are historically high for stocks, so we need to see earnings rise in the coming year.
You get the picture. There is plenty to be positive about and at the same time questions and reasons for caution. Individual investors in the U.S. have built in a lot of bullish sentiment in the market as retail investors chase theme stocks in areas of quantum computing, nuclear power and more, which sends a warning to more experienced investors.
So, what am I doing?
I continue to make small changes to provide more protection to my models, while not compromising participation in market gains. Repeatedly, it has been shown that timing the market is not the answer. Time in the market is the best way to make significant returns. Finding investments that have a history of doing well in both rising and falling markets has been a strategy I have employed for some time. I have added to them as opposed to taking extraordinary risks at this time.
lf you are interested in speaking about any of this, or have any other questions or concerns, please feel free to email me to schedule time to talk.
A Happy and Healthy New Year to all…
Thank you very much.
Jordan Kerner
Investing includes risks, including fluctuating prices and loss of principal. No strategy assures success or protects against loss. All performance referenced is historical and is no guarantee of future results.
All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.