Quarterly Client Update Q2 2024
We are just a couple of weeks into this summer, yet the lyrics to a popular country song rings true: the good times go by too fast. Our families enjoy the sunshine, extra time with friends and family, the pools, and, most recently, the 4th of July fireworks. Not everything was passing too quickly – Carrie and Kathleen, our resident “cicada-phobes”, woke up each day waiting for the buzzing to stop, while Eric wasn’t sure time passed at all while sitting in the passenger seat as Oliva learned to drive.
At the office, the good times continued in the US stock market, which rose 3.22% in Q21. The S&P 500 has been particularly impressive and has hardly given investors a reason to blink in 341 trading days – that was the last day with a 2% loss.2 It is normal to see a 2% decline at least quarterly. Overall market volatility is very low.
While the stock market has been pretty much smooth sailing lately, humans tend to make things hard on themselves. Allow us to briefly reflect on some common questions you may have as well. If you have discovered the joy of being content with your portfolio, feel free to stop reading here 😊.
Fear of missing out (FOMO) – You may have seen headlines around Nvidia’s (NVDA) performance due to the AI craze, or perhaps you’ve seen the re-emergence of Roaring Kitty and Meme stocks. It is important first to remember that, since your portfolios are extremely diversified, with the stock portion of our client’s portfolios currently holding over 15,000 companies3, you likely have exposure to whatever investment you may be reading about. It can still be tempting to see the performance of a stock like NVDA and think it might be best to own it directly and be overweight due to it’s bright future. However, research shows that once a stock becomes one of the top 10 largest companies, the stock performance tends to lag the general market. We’ve written about that here. It can be hard to remember when seeing investment-related headlines, but remember that getting into a stock after a considerable increase may not be the best idea.
On a similar note, investors are often concerned with investing when markets are at all-time highs. There have been around 25 all-time highs in the S&P 500 so far this year. Once again, we will go to the research to see what returns look like when investing at all-time highs versus any other day. It turns out there is not much of a difference; you can read more about that here.
We believe, as your advisors, the best thing we can do is emphasize the importance of economic principles that are the foundation for your investment portfolios. Your goals, desires, and preferences should dictate changes to your portfolio, not economic or market conditions. It is our privilege to walk through these decisions with you, ensuring you are well-informed. Please do not hesitate to reach out with any questions or concerns you may have.
1Russell 3000 index
2Ritholtz Wealth Management, YCharts, S&P500 Index
3Dimensional Fund Advisors
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
All investing is subject to risk, including the possible loss of the money you invest. Diversification does not ensure a profit or protect against a loss.