Your Fourth Quarter Newsletter

QUARTERLY NEWSLETTER | Q4 2024 | ISSUE 20

A Note From the President

Happy New Year! 2024 marked another year of growth for Penobscot. With the help of the market as well as a number of new clients, we finished the year with $1.4 billion under our management. Our client base today consists of a variety of clients including individuals, trustees, foundations and other non-profits. Almost half of the assets we manage are held in trust, including marital and generation-skipping trusts, tax advantaged charitable trusts such as unitrusts or charitable remainder annuity trusts, and foundations.

The growth in our trust assets prompted us to launch a subsidiary named Penobscot Trust Services LLC, which can serve as a corporate trustee. While some clients have named one of our portfolio managers to serve individually as trustee, Penobscot Trust Services LLC can serve as trustee for trusts requiring a corporate trustee or clients who prefer that arrangement. We also established a trust committee within the firm consisting of five members with years of experience managing trusts. Periodically we review administrative aspects of the trusts of which the LLC, or an individual member, is serving as trustee.

Particularly with our trust business, but also across all our clients, we work with multiple generations – in some cases the 3^rd or 4^th generation – ensuring that there is continuity and consistency as the assets are handed down. We can assist with financial planning and also collaborate with estate attorneys and accountants so there is one cohesive program. A further benefit is that for fee purposes, we can household all of a family’s assets so even smaller accounts for children or grandchildren may qualify for a lower fee depending on the household total.

Whether you have a trust, an individual or joint account, or even an IRA, our approach is the same: to construct a diversified portfolio from individual stocks and bonds which best suits your long-term goals as well as current cash needs. In addition to investing in high-quality growth stocks of well-managed companies, we also use exchange-traded funds (ETFs) to provide diversity via low-cost, tax-efficient exposure to certain areas of the market such as commodities or emerging markets.

For the equity portion of your portfolio, we pay close attention to position size both in individual companies but also economic sectors ensuring that you are broadly diversified across industries and not too concentrated in any one position or sector. On the fixed-income side, we consider municipal, agency, corporate and treasury bond ladders which stagger maturities ensuring consistent investments while providing predictable cash flows.

Finally, I want to remind you that we have a client portal on our website where you can log in at your convenience and see an activity summary, your current asset allocation as well as realized gains or losses for the year.

The new year is always a good time to review how you are invested so if you have any questions about your portfolio or any of our other services, please reach out to your portfolio manager or feel free to contact me directly.

With best wishes for a healthy and prosperous 2025,

Dan

2024- Fourth Quarter Review

As the calendar turns to 2025 and 2024 fades into investors’ memory, we can look both backwards and forwards, the backward glance with certainty and ahead with many unknowns.

For the year just ended, all major equity indices rose by double digit percentages. The NASDAQ Composite led the way, returning 28.6%. The S&P 500 Index closed out the year up 23.3%, the first time since 1998 that index rose more than 20% in two consecutive years. In sum, it was another banner year for equity investors. A great year to be sure but much of the NASDAQ and S&P returns were concentrated in a very select group of technology and communication companies, whose performance is weighted by the market capitalization of each stock in the index. By comparison, the Dow Jones Industrial Index returned 12.9%, weighting each of the 30 stocks in the index by market price, not by market capitalization. Regardless of how each index computes their performance, analyzing the numbers would lead one to conclude that 2024 ended the year with percentage increases and thus valuations well above the long-term average.

Penobscot is not in the business of predicting market performance so in looking forward, we sort through the knowns and unknowns as they might apply to the companies on our buy list. Since our founding we have focused on company fundamentals, with the belief that if we get that analysis right, the share price will hopefully reflect those fundamentals in due course. Stock prices, up or down in the short term, tend to rationalize over time.

The usual drivers of near-term price performance will be present in 2025; earnings surprises, inflation worries, interest rate movements, domestic politics and geo-political and economic concerns will create headlines to distract investors. We will remain undistracted on your portfolios’ long-term management to suit your long-term goals.

As always, we appreciate your entrusting your portfolios to our care and wish you a “Healthy, Wealthy and Wise” New Year in 2025.

Sources: FactSet

Community Service

Penobscot recently had a great volunteer outing, revitalizing chairs and benches to create a welcoming space for the elderly residents of Rogerson Communities’ Beacon House.

Rogerson Communities has been providing housing and healthcare for elders, as well as low-income individuals and families, since its founding in 1860.

155 Federal Street Suite 1602 Boston MA 02110 | 617-227-3111 | www.pimboston.com