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Registered Investment Advisor
95 Broadhollow Road, Suite 102
Melville, NY 11747
(631) 923-2485
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Investment Newsletter - Q4 2023 |
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Greetings!
Welcome to the fall season, where both the weather and the markets seem to be cooling. The market started the third quarter off by making new highs for the year, with the S&P 500 peaking in July at almost 4,600 but has since traded down given the same headwinds that we’ve been dealing with over the past year such as inflation, higher interest rates, war in Ukraine, etc.
The fall season, particularly September and October, have historically been the worst months of the year. After those months, going into the holiday season, things tend to turn around. As is always the advice, stick to your plan, make the appropriate adjustments and we will see the sun on the other side.
We give you a deeper insight into our thoughts on the past quarter and outlook further below. If you would like, we also have a link to the Q4 2023 Global Market Outlook by Russell Investments. Click here to access the in-depth commentary.
In this issue of our Investment Newsletter:
- Our investment topic this issue is one of the most common questions that we are frequently asked: "When Should You Collect Social Security?".
- 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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Investment Topic
"When Should You Collect Social Security?"
For our investment topic, "When Should You Collect Social Security?" 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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Recent articles where Landmark Wealth Management was quoted in the press
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 US News & World Report, "Fixed vs. Variable Annuities: Which Is Best for You?". To access this article, please click here.
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From an article that was on the website MarketWatch, we thought you may find this story of interest: "I am 60 and plan to retire in March. I have $113K in my 401(k) and no other savings, but I will get an early retirement package of 9 months salary. Should I get a pro to help me?". To access this article, please click here.
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From an article that was on the website MarketWatch, we thought you may find this story of interest: "Money market accounts vs. CD's: What's better?". To access this article, please click here.
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Our Updated ADV
Due to the official transition of our custodian from TD Ameritrade to Charles Schwab & Co., as per Securities and Exchange Commission (SEC) requirements, we have updated our ADV brochure. To access this, please click here. If you would like us to email or mail a hard copy, please feel free to call/email us to let us know.
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Our Perspective on Recent Market News and Activity |
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Our synopsis of the past quarter, a look ahead, and putting it all in perspective: |
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The government gridlock is back in the news these days, with the latest being the vote to remove the Speaker of the House. It is just one week ago that people were concerned about having a shutdown by October 1, and at the last minute, a bill was passed that has pushed that issue out for the next few weeks.
In regards to a possible shutdown, it seems as if just yesterday we were dealing with the same issue. In true Washington fashion, they have not done a good job in keeping the United States fiscal house in order. That stated, for as much of the headlines as a shutdown captures, as Brian Wesbury, Chief Economist at First Trust cites, along with many other prognosticators, shutdowns have been more of a non-issue and more of an annoyance than anything else, as it relates to the stock market.
Year to date, the market as measured by the S & P 500 was up over 11%, a good year by any measure. However, if we look under the hood, a good majority of those returns have been driven by the “Magnificent 7”, the top stocks in the index. The seven stocks are Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla. In our research, we looked into the returns of the market minus those 7, and the market return was closer to 7%. In fact, the Dow Jones (DJIA) which does not contain all of the “Magnificent 7” is slightly down for the year. This is unsustainable, and we don’t expect these names to continue to provide meteoric returns as we finish out the year. Diversification is still key to providing appropriate returns versus a given level of risk.
As we started the quarter in July, things were still looking up. The S&P 500 continued its march higher throughout the month and we peaked at 4,588.96 on July 31st. As the summer wore on, higher rates and other market headwinds seemed to show up in prices. The S&P was down -1.76% in August. September held true to its reputation as being the worst historical month for the markets, being off -4.85%. As of the end of the quarter, the market was off -7% from its peak and ended down -3.65% for the quarter. Mid-Caps and Small-Caps faired slightly worse in Q3, and Mid-Caps and Small-Caps are slightly positive for the year. International markets also were negative for the quarter.
As far as yields go, things look better in the bond market. Bonds haven’t seen yields like this in a long time. As of the time of this writing, the 10-year Treasury Bond yield at 4.72% is the highest it’s been since before The Great Financial Crisis. Current bonds that are in circulation have been facing pricing headwinds with the Fed continuing to keep up with its mandate to lower inflation to 2%.
Additionally, concerning bonds the yield curve remains inverted and has been so for the second longest time in U.S. history, surpassing the 2000 dot-com crash. In the September meeting the Federal Reserve held rates steady, which hopefully is a good sign that they might be close to the end of this cycle. They are monitoring the data as it comes in, meaning they are data dependent on what their next step will be. They did express to the market that they will continue to raise short term rates if they deem it necessary. Currently, the Fed Funds rate is around 5.5%. Last year at this time, the Fed Funds rate was 2.33%.
One positive to take from this is that for the past year savers have been finally starting to realize significantly better rates on their savings. Also, bond yields are better than they have been in a long time. As Jeff Gundlach the bond manager from Doubleline recently mentioned, the bond market looks like a better value than the stock market, whereas last year it was the opposite.
Although we think timing the markets is a long-term exercise in futility, the bond market seems poised to do its job in terms of providing total return from interest, maybe some appreciation, and by adding risk mitigation to an equity portfolio.
Both the aggregate and municipal bond returns for the quarter were down about 4%, and are now negative for the year.
As we look forward to the fourth quarter, there are no lack of hurdles from recession, government shutdown, student loan repayments, and labor union strikes. Jerome Powell and the Federal Reserve are trying to orchestrate a soft landing. As is often the case, the Federal Reserve has historically overshot in raising rates and they tend to do too much, resulting at times in a recession. Time will tell.
Student Loan payments will begin on October 1st. This will take $5 Billion a month by some estimates of purchasing power out of the economy. This does represent a headwind as that money has gone into mostly consumption for goods and services. The Department of Education has revised the student loan repayment options for those that are struggling to pay these payments. But for others, this could be a drag on discretionary spending.
As for the strikes, auto workers are demanding a raise of 40% pay increase over the life of their contract along with other concessions. Unfortunately, high inflation reduces standards of living for individuals and families, and workers demand raises to keep up with the rising costs of goods. Ultimately, if the cost of labor increases for corporations, the goods of these companies will rise, causing yet further increase in prices. Eventually, this seemingly endless circle of inflation will be brought under control, but hopefully not with a big draw down in asset prices and a severe recession.
Through time, the market and investors endure crisis after crisis. As we always say, if you plan properly, stay the course, investors are eventually rewarded with the returns they need to reach their goals. At least annually, it’s important to review your plan, making course corrections along the way. Remember as a long-term investor you need to eliminate the noise, and stick to the plan, even when it feels uncomfortable. Short-term price dislocations create longer term benefits and opportunities.
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.
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Below is the Q3 '23 price return performance of some of the major indices: |
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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.
- Wednesday, October 11 - Federal Open Market Committee (FOMC) releases minutes of previous meeting at 2PM.
- Thursday, October 26 at 8:30AM - GDP, 3rd quarter (advance estimate).
- Tuesday, October 31 - Wednesday, November 1: The Federal Open Market Committee (FOMC) meets, and releases their announcement on Wednesday at 2PM.
- Wednesday, November 22 - Federal Open Market Committee (FOMC) releases minutes of previous meeting at 2PM.
- Thursday, November 23 - Thanksgiving Day: US Markets closed.
- Wednesday, November 29 at 8:30AM - GDP, 3rd quarter (second estimate).
- Tuesday, December 12 - Wednesday, December 13: The Federal Open Market Committee (FOMC) meets, and releases their announcement on Wednesday at 2PM.
- Thursday, December 21 at 8:30AM - GDP, 3rd quarter (third estimate).
- Monday, December 25 - Christmas Day: US Markets closed.
- Monday, January 1, 2024 - New Years Day: US Markets closed.
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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 (not so new any longer as we have been here over two years), 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,
Direct phone: 631-923-2485
This communication is from Landmark Wealth Management, LLC, a Securities and Exchange Commission Registered Investment Advisory firm. The information in this email is not intended as tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax, legal, or investment advice from an independent professional / financial advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Information and use of materials contained in this email, including text and attachments, is confidential and is for the use of the intended recipient(s) only. If received in error, you are hereby notified that any dissemination, distribution, or copying of this communication, or any of its contents, is strictly prohibited. If you have received this communication in error, please reply to the sender and delete the original message and any copy of it from your systems. Be also advised that email communications are not secure. All e-mail sent to or from this address will be recorded by the Landmark Wealth Management, LLC email system and is subject to archival, monitoring, and inspection pursuant to securities regulations. Please direct any matters regarding this policy to [email protected].
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Landmark Wealth Management, LLC
95 Broadhollow Road, Suite 102
Melville, NY 11747
(631) 923-2485
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