Hello All-

I hope you’re enjoying summer, and managing to find some downtime to relax. Somehow it’s August already, but I’m choosing a ‘glass half full’ mindset!

While we’re all taking vacation at some point this summer, the Marathon team has been especially busy working ‘on’ the practice rather than purely ‘in’ it. We have been working with a consultant to enhance our systems and processes, to help us work more efficiently and remain on the cutting edge of our industry. One of the innovations we’ve rolled out is incorporating AI into most of our meetings, both internally and with you, our clients. Our new note-taking bot is named ‘Fred’ and he uses generative AI to bring ChatGPT to meetings (via a software tool called Fireflies). Now, within 5-10 minutes of a meeting concluding, an astonishingly well summarized & organized meeting transcript is sent to us, which will allow us to save time on notes and follow up on action items faster. While we feel the industry is still some distance from being able to use AI to reliably enhance the precision of our trading and investment platforms, we are of course assessing the innovations that are happening as we speak and may consider incorporating this down the line. We have talked about the outlook for AI (and the exposure you have to it within our models) a fair amount in the last few distributions, and will be discussing it again in our Q2 review/Q3 outlook video we will be shooting next week.

As you may have noticed, we are starting to distribute market commentary on a more frequent (weekly) basis and these installments are being led/written by John Bay, our chief market strategist & trader. John is of course a prodigious student of the market and spends a lot of his time each week reading and researching, and wanted to share his observations and commentary on a more frequent basis. I am all for it, as everything he writes is insightful, and it will leave me more room in the newsletter content I produce to write about financial planning strategies. With that said, I’m going to focus this content on key updates on financial planning topics & strategies.

But first I would like to introduce you to Connor Gallivan, who joined our team in early June. Connor is a seasoned Financial Advisor who started his career with Putnam Investments, where he consulted with advisors on portfolio construction, particularly in the fixed income markets. He later decided that he wanted to be more hands-on in working directly with clients as an advisor, and has served in that capacity for a number of years now with another firm in the Boston area, prior to joining us. Connor has a degree in Finance from Providence College. He was born and raised in Burlington, MA, and currently lives in South Boston. Connor comes from a long line of teachers and coaches and maintains this mindset/approach when working with clients. This resonated with me as I was interviewing for the role, because one of Marathon’s core values is that we are educators first. It is our mission to meet our clients where they are, at any literacy level, and build a curriculum as we go along, over the entire lifespan of the relationship, to systematically enhance their literacy on this subject matter and gain a sense of empowerment and control over their outcomes. I look forward to introducing you to Connor in the coming months.

                                

I know I said John would be doing most of the market commentary in these weekly distributions we’re starting to put out, but before I get into pure planning-focused ‘stuff’, I did want to at least briefly talk about the market and investing from a behavioral perspective, as your Behavioral Investment Counselor, above all else. And take a moment to commend you for staying calm and remaining invested throughout a very rough 2022. As painful as it was to be an investor last year, let’s take a look back for a moment. I promise the PTSD will only be momentary, because I’m going to quickly zoom back out! On October 12, 2022, the S&P 500 hit its closing low for the year. As I write this, less than a year later, the S&P 500 is trading nearly a thousand points higher than this low point in October 2022, which is to say, it’s up about 27%. As Nick Murray said in one of his recent publications “…Thus, the age-old cycle of investing tragedy is nearing its latest completion.” The tragedy, of course, is panic liquidation of long-term holdings in quality companies just when their valuations are coming back down to earth, and before their prices inevitably begin cycling upward again. The current iteration of the tragedy is perhaps more poignant than most, in that the 2022 decline represented an inevitable correction following one of the greatest market runs in history.

As was noted roughly zero times by financial journalism these 20 past months, the 10-month, 25% contraction in the S&P 500 came after almost 13 years in which the Index went up seven times (from 677 to 4,800), and returned an average annual compound 17.6%. If that were not already ‘too hot not to cool down’ juiced by a two-year, 40% explosion in the M2 money supply—the fastest, steepest Fed interest rate spike ever was more than sufficient to do the trick. And so it did—remarkably, without driving the economy into recession (at least so far). Investors with any bit of adult memory, or perspective longer than the life cycle of the mayfly, were at least capable of processing these developments as part of a pattern—the continuous waxing and waning of equity prices around their wonderfully rising long-term trendline. Others—reliant for their investment policy on whatever doomsday scenario is said to be playing out in financial media on any given morning—fled, even after the earnest pleadings of a Behavioral Investment Counselor 😉Thankfully zero of our clients fit that latter description.

Of course, while the patient disciplined investor was riding out the unpleasantness, his/her sharply rising dividend income was being invested in increased numbers of panic-priced shares. Remember that while the Index was declining 18% or so during the last year, the S&P 500’s dividend shot up 11%. Thus, we who experience a market decline as opportunists don’t merely outperform those who experience it as victims. We prosper quite directly by buying the shares they shouldn’t be selling. Their lost returns become our future gains—and compounding gains at that. I’m just not sure I say that often enough, or strongly enough, to you as clients, as we go through market declines. “Every day you hang in there, your reinvested dividends are buying more shares at fire-sale prices from somebody who’s panicking out—who’s making the mistake you refuse to make.”

My advice will always be summed up as:

The advice is never to get out of the market, not just because it would inevitably turn—that too—but because neither I nor anyone else could time that turn.

OK, so it’s August and Q4/year-end will (sadly) be upon us before we know it, so below is a bulletin of sorts with planning opportunity reminders and updates:

Where to park cash

Tax planning

College planning

Retirement planning

HSAs

If you’re charitably inclined

If you own a business entity

Student loans/Public Service Loan Forgiveness

Miscellaneous articles to share

There was a bunch more I wanted to write here about Social Security & Medicare, but to do those two justice, I’m going to save for the next installment.

Hopefully you found this useful. As always, please don’t hesitate to reach out with questions. It is a privilege, and great pleasure to serve you—thank you for your trust and confidence.

 

Charlie

Jacob Foley | Chief Operating Officer | jfoley@meetmarathon.com

Indrani Namilikonda | Client Services Coordinator | inamilikonda@meetmarathon.com

John Bay, CFA | Chief Market Strategist | jbay@meetmarathon.com

Connor Gallivan | Financial Advisor | cgallivan@meetmarathon.com