January 27, 2024

By Andrea Young on January 29, 2024

Where’s Our Head?

Post-Game Lessons with Bill Belichick
Prepare, Don’t Predict

Bruce Thompson
Managing Director – Senior Wealth Advisor

January 2024

Happy New Year! The turn of the calendar brought news that Bill Belichick will be leaving the New England Patriots after 24 years as head coach. He led the team to an incredible 17 AFC East Championships and 8 Super Bowl titles. His tenure was characterized by excellence, a commitment to professionalism and, shall we say, a “tell it like it is” style with the press.

For this quarter’s Client Letter, we honor Bill by engaging him in an imagined post-2023 market review conference. Maybe he has some parting lessons we can bank on in 2024 and beyond.

First, here is a summary of asset class returns for the period ending December 31, 2023. It includes performance since the prior stock market peak near the end of 2021, and since the market bottom near September 30, 2022.

Asset Class Summary as of December 31, 2023

For a larger view of the chart, Click HERE

Bill, how did stocks do last year?
It’s all there in black and white, pretty self-explanatory. Good year, but lots of volatility. Finished strong in the 4th quarter with a jump of 11%. Stocks were up 22.2% for the year, and 26.6% since September 30, 2022, when the market hit bottom, recapturing all the ground lost in 2022.

Were you surprised by the markets’ performance last year?
Stocks go up, they go down, they go up again. Always been that way. Doesn’t seem that unusual.

To read the full quarterly market letter, click HERE.

Market Commentary

Too Much of a Good Thing Can Be Wonderful! – Mae West 

January 24, 2024

New all-time highs for the Dow Jones Industrial Average, The Standard and Poors’ 500, and the NASDAQ feel great. The rally of 2023 carries into 2024 with the rate of inflation falling, interest rates lower, gas prices lower and Consumer Sentiment on the rise. Woohoo! Yippee! Pop the corks! Let the pigeons loose! These are celebratory events. While the few final points taking markets past former highs may not be empirically material, that they happen provides confirmation of capitalism, the steady expansion over time of the American economy and, indeed, the great American experiment itself. It is a time to pause and enjoy the sunshine and fair economic weather. 

It’s difficult to find a lot of nattering negativity this January. It’s also odd that last January, when these same indexes were some 20-25% lower, there was an abundance of negativity. Investors feel good and relaxed and expect these uptrends will continue. The U.S. consumer feels good too and has continued to spend. Spending follows both the capacity of consumers’ wallets and the brightness (or dimness) of consumer attitudes. The expectation that today’s ebullience will continue fosters complacency and more sanguine attitudes toward potential dangers. 

A glaring contradictory skunk at the picnic is the rosy expectation that the Federal Reserve will soon again begin a cycle of lowering interest rates. The Fed always does one of three things: accommodate the economy, restrict the economy and/or wait. The Fed has been restricting the economy since March 2022 and through today. The Fed restricts policy to slow economic expansion and thwart inflation. This helps achieve its goal of price stability. It was late to the party believing that much of the post-pandemic inflation would be transitory due to supply chain issues that would pass. Supply chain issues were transitory, but the Fed underestimated the effects of so much monetary and fiscal largesse that drove consumer spending relentlessly higher. Though late, the rapid tightening of policy seems to have worked as the rate of inflation continues to come down. 

Why do I call the expectation for lower rates both rosy and contradictory? Because the Federal Reserve has no reason to accommodate a healthy, thriving, well-behaving economy. The Fed becomes accommodative only when it must in order to keep the economy from contracting. The economy will certainly contract if the Fed has restricted policy too much by raising interest rates too high. Though the jury is still out, the economic data is softening. The question is whether or not this softening will stop at the “goldilocks” just-right place. If not, the economy gets into a bit of trouble, and the Fed will begin its next accommodative cycle. You see? For the Fed to lower rates, the economy must get dicey and that’s not good for stock investors. So, investors have no business feeling sanguine about future rate cuts. While it’s true that periods of rate cuts lead to higher stock prices, the precursor of economic pain cannot be overlooked. Complacency and ignoring the danger of a little girl blithely hanging out in a bears’ den have cost investors dearly over time. 

Advice from the white-haired portfolio manager: celebrate today and your success. Evaluate your allocation and risk exposure. Make dispassionate, long-term decisions consistent with your personal goals 

and long-term strategy. I always keep an umbrella in the backseat, even on sunny days, and especially after a record number of sunny days in a row. Remember: the rule is ‘buy low.’ 

Peace, 

Michael 

New Year’s Financial Checklist

To view the full checklist, click HERE.

Well-thy Conversations
Webinar

February 27, 2024

4:00 PM EST

Concerns arise among parents and grandparents regarding the well-being and future of their children and grandchildren. They worry about the world in which the younger generations are growing up, how they are growing up, the challenges that they face, and how they will turn out. This worry is heightened for those with substantial wealth.

Research has shown that 70% of family wealth is lost in the second generation and that 90% is lost in the third. Individuals and families have spent countless hours with their financial advisors, accountants, and lawyers to create the most beneficial path forward for their family’s wealth and despite this, most of the wealth is lost in a relatively short period of time. Although all of this planning is important, it is not enough to ensure that your children and grandchildren will be able to build on the foundation you created.

While wealth may be passed down, the transmission of values becomes a pivotal concern. It becomes evident that without instilling values, the longevity of inherited wealth is compromised. In this webinar, hear how generational wealth is the result of careful financial planning that includes the passing on of a value system to future generations.

To register for this webinar, click HERE.

Where’s Our Heart

Welcome to the Lexington Wealth Family

Join us in congratulating Eddie and his wife Maura on the birth of their beautiful baby boy!

Well-th & Well-being

Pathways to Hope: Navigating the Breast Cancer Journey- With Victoria Smart (EP. 34)

Breast cancer remains a significant health challenge facing millions of women today, with early detection and access to quality care being crucial in the fight against this pervasive disease.

Let’s tackle the tough conversations and navigate the journey together.

In this episode, Barbara Archer speaks with Victoria Smart, Senior Vice President of Mission for the Susan G. Komen organization, the world’s largest breast cancer organization with over $3 billion in investments in breast cancer research, advocacy, and patient support to date. They have an insightful discussion on the different types of breast cancer, risk factors, diagnosis and treatment choices, emotional and psychological impact, and post-recovery options and challenges.

Victoria Smart discusses:

• Best practices to improve the chance of early detection
• What patients may expect while undergoing treatment and navigating various options
• Effective coping strategies and lifestyle changes to aid the fight against breast cancer
• How friends and family of a breast cancer patient can build a strong support system
• Advancements in breast cancer research (including the advocacy and efforts of Susan G. Komen)
• And more

To listen to the podcast episode, click HERE.

Our Latest Empower Women Podcast

Check out our January Empower Women Series podcast episode, How to Love in the Face of Hate, With Robyn Vogel. Robyn, a clinical psychotherapist and International Love and Intimacy Coach explained that we must continue bringing LOVE into the world and staying present with love no matter what. She also discussed how you can choose love, choose yourself, and choose to contribute.

You can also read our event takeaways by clicking HERE!

To listen to the podcast episode, click HERE.

Enjoy a guided Meditation by Robyn Vogel

Click HERE to Listen