Third Quarter 2024 Market Commentary
Hello from Sycamore,
Performance and The Markets
Let’s start with the good news! September is historically the worst-performing month of the year for the stock market, but not in 2024. Our composite gained a little more than 1.5% for September, it has gained a bit more than 27% for the last 12 months, and over the last 10 years, it has gained 224% or almost 11% per year. These have indeed been wonderful times for shareholders. We cannot see into the future, but for practical purposes, we believe the next 50 years will be like the past 50 years. However, over the next 10 years, we expect returns to be muted somewhat when compared to the past 10 years.
Let’s all take a moment to thank Adam Smith for promoting capitalism when our country was formed. Capitalism can be difficult from time to time and brutal occasionally, but it is efficient. As shareholders, capitalism (recessions included) is our friend. Our economy continues to grow, we’re creating more jobs, inflation is being tamped down, and interest rates have been reduced recently. There is always room for improvement and there are always ‘pundits’ sharing their version of doom (bad news sells, ya know), but we do not see anything on the horizon that will derail our economic growth or the stock market. Of course, the stock market can sometimes be emotional, so we’ll need to be prepared for the normal ups and downs. This is not 1999. We are finding many companies that can be purchased at what we feel are bargain prices.
The Economy
As I mentioned earlier, our economy continues to perform well. It appears that the Federal Reserve Bank believes inflation is under control enough to start reducing interest rates. A reduction of 0.5% was announced recently. Our gross domestic product – which recently has been revised upward by the Commerce Department – has been growing at a modest and steady pace of a little more than 2% since 2020. Housing starts are weaker than we would like, but auto sales have remained firm and are trending higher. We think the recent decrease in interest rates will help both industries. Job creation has slowed over the past year, but we still have created almost two and a half million new jobs over the last 12 months. Currently, we expect – and look forward to – more slow and steady growth from our overall economy. Thank you, Adam Smith.
Investors vs Speculators
Each fall we like to thank you for being investors and not speculators, and we like to remind you of our investment goals for your account(s) that are using our ‘Growth at a Reasonable Price’ (GARP) strategy. First, we work to deliver reasonably good returns. Second, through our ‘risk first’ analysis and broad diversification, we make a concerted effort to reduce risk and volatility in your portfolio(s) with us. The markets have been good for so long that it’s easy to forget about the risk side of investing, but we have not been trying to hit ‘home runs’ in the past and we have no plans to start now. We’ve learned over the years that additional risk can mean LESS return. We have no plans to place your capital at additional risk no matter how tempting the current ‘story’ is. Third, we do our best to keep taxes on your portfolio(s) as low as possible, but please remember that taxes are a secondary consideration…our first goal is to earn profits.
Purchase and Sale Activity During Q-3
Sales: Stericycle (SRCL), Sirius (SIRI)
Buys: Nice LTD (NICE), VeriSign Inc. (VRSN)
Thanks for your business and trust!
Sincerely,
The Sycamore Financial Group Team
*Data not audited
**Results reported gross of fees
***Past performance does not assure future results. Investors cannot invest directly in the stock market indexes such as the S&P 500. Investment return and principal value of an investment will fluctuate. Investor value, when sold may be worth more or less than their original cost.
The CFP® designation identifies individuals who have met the stringent experience and ethical standards set by the CFP Board. This includes the successful completion of financial planning coursework at an accredited college or university and passing an exam that covers a wide range of topics: Professional Conduct and Regulations, General Principles of Financial Planning, Risk Management and Insurance Planning, Investment Planning, Tax Planning, Retirement Savings and Income Planning, Estate Planning, and the Psychology of Financial Planning.
Sycamore Financial Group understands that each individual has unique financial aspirations. Consistently achieving these goals hinges on a close relationship with a trusted, knowledgeable financial advisor. With decades of experience in investment management and financial planning, our team is dedicated to strategically safeguarding and enhancing the assets of our clients. We prioritize three objectives for our client’s portfolios: delivering solid returns, minimizing volatility, and optimizing tax efficiency.