January 2024
ALWAYS OPTIMISTIC ABOUT AMERICA!
I’m really excited about 2024. We have expanded into Texas with great energy thanks to our newest superstar colleague, Kate Finley. The economy looks like it has a solid chance of avoiding a recession, even after all the rate hikes. And, the stock market just set a new all-time high erasing the drop of the 2022 bear market.
Our new Texas office is up and running, and we’ve gotten great feedback on our name change to Trinity Strategic Wealth. We have offices in four cities now, and just recently passed the $1.4 billion mark in assets under management thanks to you, our wonderful clients.
As we hoped for 2023, the pace of inflation, although not nominal prices themselves, did retreat and shows progress towards the Federal Reserve’s target of 2%. The Fed appears to be done with rate hikes, and the stock market finished off 2023 with a strong rally.
I’m also looking forward to the Presidential campaign cycle this year. You probably think I’m crazy, but 80% of U.S. Presidential election years are positive for the stock market. So, bring on Biden versus Trump! I know you are shaking your head right now, but fortunately the more significant matter for 2024 is the action of the Federal Reserve.
We are certainly mindful of the risks out there which include a possible economic slowdown, the uncertainties that come with election years and possible geopolitical tensions. But as you have seen, long-term, high-quality investment strategies with good diversification did just fine the last 5 years even with a global pandemic and rough 2022 bear market. Together, with a good financial plan, we can handle the future.
We are always optimistic about America and our innovative spirit that drives value for consumers and creates wealth and prosperity! Oh, and one other item makes me excited about 2024. My youngest son Jackson will graduate from college, and I will be done with college tuition expenses for 5 kids! Free market capitalism made this possible, and I’m so thankful we live in the greatest country in the world!
Have a wonderful 2024!
Sincerely,
Mike Mazzei, CFP®, MPAS®
MASTER PLANNER ADVANCED STUDIES®
President, Trinity Strategic Wealth™
mike.mazzei@raymondjames.com
(918) 858-2802
MARCH 2024
“HISTORY RHYMES”
Looking at the market today, we cannot help but see some similarities between the Nifty Fifty period of the 1960s and 1970s, the technology bubble of the 1990s, and the period leading up the Financial Crisis in 2008. The last 15 months can be characterized by massive gains in a small subset of stocks dubbed the Magnificent Seven (Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla). While these are all amazing companies, we believe it is right to be concerned about their valuations and the concentration we see in the stock market. In that sense, we are most reminded of the Nifty Fifty period, which was led by companies such as AT&T, Eastman Kodak, Exxon, General Motors, IBM, and Sears.
None of the aforementioned periods are exactly the same as today, but they do rhyme. All three of those periods led to a bear market and recession. All of the bear market cycles lasted at least one year, unlike the quick declines we saw in 1987 or 2020.
Also similar to those times is the economic backdrop. Last year real GDP increased 3.1%, much higher than the 2% long-term average. The strong growth was partially driven by government spending as the federal deficit ran at levels only seen during major recessions or wars. However, we are starting to see evidence of cracks under the surface. Retail sales are down three of the past four months, manufacturing production ex-autos (a highly volatile sector) has declined four months in a row, and housing starts fell nearly 15% in January. Despite some signs of a slowing economy, inflation numbers were higher than expected in January. The year-ago comparison for inflation has settled around 3% in recent months, still above the Federal Reserve’s 2% target. We believe inflation will make it back to 2%, but the economy likely needs to slow further to get there.
Based on that backdrop we have been fielding many questions about how to invest in this type of environment. Our answer is not exciting, but we feel it will be the right one – stay diversified. If history rhymes, other areas of the market could see stronger performance relative to the last few years. In this bucket, we consider areas like small and medium sized companies and value stocks. We have mentioned it previously, but we also believe that bonds look much more attractive with higher interest rates.
Bottom line, if today is similar to other periods in history, we would expect to see heightened volatility in markets in 2024. This is also an election year and we often see more market fluctuations in election years. We continue to diligently monitor potential risks and stand prepared to act on any opportunities that come from such fluctuations. The key will be to stay invested and remain diversified.
Thank you for your continued trust and allowing us to serve you.
Sincerely,
Andrew K. Steinmetz, CFA, MBA
Branch Chief Investment Officer
Trinity Strategic Wealth™