Investment Newsletter - Q1 2025 | |
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Greetings! We here at Landmark hope you had a very merry holiday season and are keeping warm in the winter months (and to our clients in warmer states we express just a little bit of envy)! This past quarter has come to an end and there is much to discuss both looking back at 2024 and looking forward to the beginning of 2025. The Presidential election is now firmly in the rearview mirror and now the burning questions of exit and entrance polls and “who will win?” has been replaced with questions of who will be nominated for cabinet positions and how a second Trump Presidency will look. With that said we will give the same disclaimer that we gave in previous newsletters which is that all of the data shows that unlike your favorite (or least favorite) cable news programming the market remains politically unaffiliated and will march along no matter who is in office.
Speaking of the market, the year-end data has arrived, and it was a very good year for equities and a bit of a challenging year for bonds. This past quarter also saw inflation reach relatively low levels, but the end of the quarter saw inflation tick back up in consecutive prints to where it now sits at 2.7% (which while well below the historical average of 3.25% is still above the Fed’s 2% target). This could make it a challenge for the Fed as they were looking to navigate to cut rates further in 2025. “Value” oriented equities took a step back in the 4th quarter but still had a positive year overall. On the fixed income front, though bonds remained positive earlier in the year, they were mostly negative for Q4. That said, fixed income is finally paying investors at a more historically normal rate as opposed to how they behaved during the 14 or so years of barely any interest coming out of the 2008 financial crisis.
We give you a deeper insight into our thoughts on the past quarter and 2024 and an outlook for 2025 further below. If you would like, we also have a link to Vanguard's economic and market outlook for 2025 (click here), and the 2025 Global Market Outlook by Russell Investments (click here for the executive summary, and click here for a more in-depth view).
Keep in mind, besides these predictions and outlooks, there are plenty of others, and the reality is that no one knows for sure what will happen tomorrow, let alone the next few months. This recent article in the NY Times (click here) is worth a look at as it makes this point, while emphasizing the "right way" to think about predictions and investing.
In this issue of our Investment Newsletter:
- A "special notice" about a message that can be found on Schwab's website and describes a recent "phishing" or "smishing" campaign that has occurred for some Schwab clients.
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Our investment topic this issue is: "How Long Does it Take the Market to Recover?"
- Recent articles where Landmark Wealth Management was quoted in the press
- An overview of recent market activity, along with Our Perspective...
- A recap of the performance of major market indices from the past quarter
- Upcoming Economic Calendar
You will find past investment articles, by clicking the Articles tab above, or directly on our website, found under Periodicals.
If there is a topic of interest you would like to see covered in the future, please reply back to this email to let us know, or click here. Likewise, if you have any questions on this or anything else, feel free to reply back.
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The below message can be found on Schwab's website and describes a recent "phishing" or "smishing" campaign that has occurred for some Schwab clients.
We have been alerted that there is an active phishing text campaign in which clients receive a text message from an international number and it mentions a disbursement from the client's account. It then asks to click on a link to log into their account to verify the transaction. Please review the red flags below to help identify if the text is a phishing attempt:
- The texts are coming from different international phone numbers.
- The texts notify that an ACH was debited from their Schwab account, typically in the thousands of dollars.
- The text then instructs the client to cancel the disbursement if they did not request it, by replying "Y" and clicking on the link provided.
- The link's URL is a variation of a spoofed Schwab domain For example https://schwbba.com, https://schwabd.com, https://schwbab.com, etc.
Be aware:
- Schwab does not notify client about completed transaction via text message.
- Schwab does not send out text messages from international numbers.
Keep in mind: Unlike many other attacks, smishing isn't necessarily an indication that your client has been compromised—the attackers send a message to a large number of randomly chosen phone numbers, hoping some of those people will respond.
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"How Long Does it Take the Market to Recover?"
For our investment topic, "How Long Does it Take the Market to Recover?" we give our thoughts and suggestions. To learn more, please click here.
Please note - this investment topic, as well as past investment topics, can be found on our website under the Articles tab, or you can click here.
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Landmark Wealth Management Quotes in the Press | |
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The past few years, Landmark Wealth Management has been quoted in the press for various articles. We have decided to start sharing these when they happen. If curious about past times we were mentioned, you can see it on our website under Articles > In The Press, or simply click here.
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From an article on the website MoneyGeek: "How Much is Life Insurance in December 2024?" To access this article, please click here.
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From an article on the website MarketWatch, "My CD is maturing in 2 months – and now I’m wondering: Should I renew it again for 9 months? What would a financial adviser tell me to do?". To access this article, please click here.
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From an article that was on the website MarketWatch: "‘What options do I have?’ I have $150K and wondering if there is any possible way to make a 3-5% return on that money". To access this article, please click here.
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Our Perspective on Recent Market News and Activity | |
Our synopsis of the past quarter, a look ahead, and putting it all in perspective: | |
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With the holidays behind us, we can now get a solid picture of both Q4 2024 and how 2024 stacked up as a year in general. We can also look forward and see what is on the horizon for 2025 and beyond.
The 4th Quarter was a truly disappointing way to end the year for the markets. What started as a post-election rally, which many thought might transition into a Santa Claus rally, ended with the Grinch stepping in and taking away some of the presents we were all expecting for year-end results. It began with the Fed starting its interest reduction plan in September. While the Fed cut interest rates by 1%, the yield on the 10-year treasury moved up 1%, which is not the way lowering interest rates historically affects the bond market. The reason? Embers of inflation began to flare up again, with some hot CPI and PPI numbers, which gave both the stock and bond markets concern and dampened the enthusiasm we had been enjoying. While the lowering of interest rates was a sight for sore eyes for many fixed-income holders (and for anyone trying to get a home or car loan), things may not be quite as rosy as they seem. With inflation ticking back up to 2.7% and the stock market having a poor Q4, especially after the cuts, the Fed is in a somewhat precarious position if they try to cut further, doubly so if inflation rises to a level that necessitates a rate increase.
The headline indexes such as the S&P 500 and the NASDAQ still had fine years, but the broadening out of market returns, which had really started to happen, saw some decent-sized losses in Q4. Even bonds, which have been very challenged over the last few years despite their higher interest payments, saw their values decrease yet again. It is important to note that while we tend to evaluate returns on a calendar annual basis, not all asset classes move up and down simultaneously, and asset class returns should be viewed over a longer-term full market cycle. Value stocks also significantly underperformed Growth stocks, which has been a recurring theme as of late. When this will change is anybody's guess, but historically, these trends are temporary, and Value stocks still outperform Growth stocks over the long term. A well-diversified, asset-allocated portfolio seeks to avoid home runs but rather to provide performance results that meet one's financial goals and risk tolerance and reduce those periods of downside market volatility that we know will come from time to time.
Both Mid and Small Cap stocks could not continue their Q3 momentum and had a largely flat Q4. International stocks also posted a very disappointing quarter, with the MSCI EAFE (international equities index) and the MSCI Emerging Markets Index both posting negative returns of 8%.
As mentioned previously, the bond market had a negative Q4. Treasuries also underwent some changes due to the three rate cuts. Keep in mind that with bonds and bond funds, the price is just one piece to consider, as the main driver for bonds is the income they generate. This income is not reflected in the overall price return shown, yet it distributes money that essentially goes into the investor's pocket.
Looking forward to 2025, the biggest outstanding question has shifted from, “Who will be the new president of the United States?” to, “What will a second Trump presidency look like?” Within that second question, the topic that has been getting the most airtime is the issue of tariffs, which, depending on what happens, could be inflationary or a useful bargaining chip on the negotiating table abroad. Beyond that, some questions about tax rates and the taxability of Social Security benefits persist. Without a crystal ball, we cannot say exactly how these issues will be resolved, but we can reiterate the same message we stated earlier in this newsletter and in previous editions. The market is politically unaffiliated; the companies that drive the economy will find a way to turn a profit no matter the party in the Oval Office or the regulatory environment.
If it has been a while since we last sat down and went over your personal numbers, we encourage you to make an appointment and meet with us for a review. We hope you had a happy holiday season and a great start to the New Year and Q1 2025.
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Please remember that all investments carry some level of risk, including the potential loss of principal invested. They do not typically grow at an even rate of return and may experience negative growth. As with any type of portfolio structuring, attempting to reduce risk and increase return could, at certain times, unintentionally reduce returns. | |
Below is the Q4 '24 and year-end 2024 price return performance of some of the major indices: | |
On The Investment Horizon | |
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Upcoming Key Dates on the Economic Calendar
- First Friday of each month: Unemployment report for the prior month, released at 8:30AM.
- Monday January 20th- MLK Jr Day: US Markets Closed.
- Tuesday, January 28th - Wednesday, January 29th: The Federal Open Market Committee (FOMC) meets, and releases their announcement on Wednesday at 2PM.
- Wednesday, January 29th - Federal Open Market Committee (FOMC) releases minutes of previous meeting at 2PM
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Thursday, January 30th Gross Domestic Product, 4th Quarter and Year 2024 (Advance Estimate)
- Monday, February 17th- Presidents Day: US Markets Closed.
- Thursday, February 27th Gross Domestic Product, 4th Quarter and Year 2024 (Second Estimate)
- Tuesday, March 18th - Wednesday, March 19th: The Federal Open Market Committee (FOMC) meets, and releases their announcement on Wednesday at 2PM.
- Thursday, March 27th-Gross Domestic Product, 4th Quarter and Year 2024 (Third Estimate), GDP by Industry, and Corporate Profits
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General & Contact Information | |
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For our clients - You should have received your statement directly from our account custodian, Charles Schwab& Co. If you have not, please let us know so that we may investigate the matter. Please review your statement carefully and let us know if you have any questions or comments.
Also, as a reminder, our office has a nice sized conference room to use for our meetings and updates. If you do not feel comfortable coming into our office or if it is inconvenient, we recommend that we set up a Zoom or teleconference call to update your planning numbers, especially if it has been more than a year since we have last done so. Please feel free to reach out.
For everyone - If you desire an appointment, have any questions on any of this material, or any other financial subjects may relate to your own financial circumstance, please reach out to us at the contact information below:
Sincerely,
Brian Cohen, CCO; email: brian@landmarkwealthmgmt.com; phone: 631-923-2487
Chris Congema, CFP®; email: chris@landmarkwealthmgmt.com; phone: 631-923-2486
Joe Favorito, CFP®; email: jfavorito@landmarkwealthmgmt.com; phone: 631-930-5336
Jim Millington, CFP®; email: jim@landmarkwealthmgmt.com; phone: 631-470-0765
Aaron Belletsky; email: aaron@landmarkwealthmgmt.com; phone: 631-982-8049
Direct office email: info@landmarkwealthmgmt.com
Direct phone: 631-923-2485
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