2023 Newsletters Archives - Sycamore Financial Group

2024 Contribution Limit Changes

Hello from Sycamore,

Did you Know?

For the 2024 tax year, some contribution limits have increased.

401(k), 403(b), & 457 account contribution limits are now $23,000 for the year.
- There is a $7,500 catch-up if you will turn 50 in 2024.
Traditional and Roth IRA annual contribution limits are now $7,000.
- There is a $1,000 catch-up if you will turn 50 in 2024.
SIMPLE IRA contribution limits are now $16,000.
- There is a $3,500 catch-up if you will turn 50 in 2024.
Health savings account limits are now $4,150 for individuals and $8,300 for families.
- There is a $1,000 catch-up if you will turn 55 in 2024.
The annual gift tax exclusion for 2024 is $18,000 per person.
The annual qualified charitable distribution (QCD) limits are now $105,000.

As always, do not hesitate to reach out to our offices at (765) 455-1554 to discuss this.

Thank you for your continued trust and support,

Sycamore Financial Group

***This article is distributed for general informational and educational purposes and is not intended to constitute legal, tax, accounting, or investment advice.***

By Allison Rumschik|2023-12-15T03:09:17-05:00December 15th, 2023|2023 Newsletters|0 Comments

Third Quarter Commentary 2023

Hello from Sycamore,

Performance and the Markets

It seems like there is always plenty to worry about and this year is no exception. Considering the political environment and the calls for a recession over the past year or so, there is plenty to be concerned about. However, as we think back over the years, there has always been enough to be concerned about, but how many of the things we worried about came to fruition? I think you’ll agree that the answer to that question is very few. According to researchers at Penn State University, only about 8% of the things people worry about come true. From our perspective, what we have today is simply more of ‘the normal’. Share prices and most markets have been declining a bit for the last month or so, but this is not unusual. We’re at about the same level now as we were at the 1^st of 2023 and for practical purposes, ad the market has been relatively quiet for almost 2 years.

The economy and the consumer are still strong. The Federal Reserve Bank of Atlanta’s GDPNow estimate for the 3^rd quarter of 2023 is +4.9%. This number is a good argument against a recession anytime soon. If a recession does appear, we feel it will likely be mild and after the roughly 25% decline in the S&P about 1 year ago, we feel the markets have already priced it in. Some sectors – especially tech – are a bit overvalued, but overall, we see the market as being ‘fairly’ priced. By the way, we’ve just had ten years of very good share value increases, and we do not expect those ‘outsized’ returns to continue. We look for more modest gains over the next few years. Fixed investments are now certainly paying more than they have since before The Great Recession, but we also have higher inflation, so they are just keeping up. We remain optimistic over the long haul. As we do our research looking for bargains, we are having no trouble finding good value.

The Economy

The economy appears healthy. As we mentioned above, The Federal Reserve Bank of Atlanta’s GDPNow estimate for the 3^rd quarter of 2023 is +4.9%. There are still some who feel we will have a recession, but those voices are fading a bit and their predictions have been tempered. It is true that the Fed has been raising interest rates though the rate of increase has slowed considerably this year. Higher interest rates should tamp down inflation and we’re already seeing some success with this. Additionally, the money supply, M-2 is declining. This is unfamiliar territory so time will tell, but we believe this is good and necessary after the cash infusion we had during COVID-19. While all this has been happening, the economy is continuing to do reasonably well. Unemployment is at historical lows, new home sales, which had declined significantly from their 2020 highs have started to trend higher during 2023. Disposable personal income is growing, new orders for durable goods are trending higher, and Inflation – which peaked in mid-2022 at an annualized rate of about 9% – has now dropped to around 5%. Things aren’t perfect, they never are, but overall, there is plenty to be positive about.

Purchase and Sale Activity During Q-3

We bought MDU Resources – MDU, ASGN Inc- ASGN, Forward Air – FWRD and AMC – AMCX

We sold Flour Corp – FLR, Kenvue – KVUE, and Knife River Corp – KNF

We’ve started to shift into longer-term bonds and fixed investments.

Investors and Speculators

Each year we like to remind you of our goals for your portfolio(s). We are pleased to have outperformed the S&P 500 over the last 27 years, but that is not one of our primary goals. Our long-term goals for your portfolio(s) are to deliver reasonably good returns, reduce your overall volatility, and reduce your taxes through lower turnover. Speculators worry about the latest story and today’s market opening direction. Investors purchase good businesses and participate in their growth.

As always, do not hesitate to reach out to our offices at (765) 455-1554 to discuss this.

Thank you for your continued trust and support,

Sycamore Financial Group

*Data not audited
*Results reported gross 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.

By Allison Rumschik|2023-10-26T23:48:28-04:00October 26th, 2023|2023 Newsletters|0 Comments

Second Quarter Commentary 2023

Hello from Sycamore,

Performance and the Markets

So far so good for 2023. Since the markets found a low point last fall, they have been steadily climbing. We are not back to the highs that we experienced at the end of 2021, but with the Dow Jones industrial average at about 34,000 now, we’re within shouting distance. From June 30th, 2022, our growth and income composite have gained more than 19%. We are pleased with these returns. We are also pleased that the pending recession – which according to many news outlets, has been just around the corner for about the last 18 months – still seems to be around that corner! That’s not to say that it isn’t coming, forecasting can be difficult. As Yogi Berra said, “It’s tough to make predictions, especially about the future”.

Because we do our own research and make individual stock selections for your portfolio(s), we are constantly evaluating several hundred individual securities based on their assets and profitability. Nothing is assured, but currently, we see most securities that we follow as being ‘reasonably’ priced. While we do not expect our composite to gain another 9% during the last half of 2023, we are comfortable with current valuations. We believe that in the long run share prices will follow the profitability of the company. With a few exceptions, the profits of the companies that we follow are progressing as we would expect.

The Economy

We recently received good news on the inflation front. The current annual rate has dropped to 3%, which is the lowest rate in more than two years. The federal reserve has recently slowed the pace of interest rate hikes, and they have indicated that one or two more .25% hikes will likely be all we’ll see in the near future. We feel the recent inflation news shows the rate hikes over the last year have been effective.

Producer prices, which at their peak in 2021 and 2022 were growing at nearly a 23% annualized rate, are now declining at about a 6% annualized rate. Generally, the producer price index is a good indicator of what to expect from the consumer price index. If history holds true, we could expect inflation to continue to subside.

In our March letter to you, we mentioned that the money supply in the economy (M2) was decreasing. That is still the case. This is another metric that leads us to believe inflation will continue to ease. The economy continues to create new jobs at a brisk pace and has created 1.67 million new jobs so far in 2023. The unemployment rate now stands at 3.6%.

We recently received good news about our first quarter gross domestic product (GDP). The estimate was revised up by .7% to 2%. It seems consumers are getting used to higher interest rates and sales of existing homes have bounced back a little while housing starts are showing signs of getting back on track.

Not everything is perfect, but the recent data showing the economy is growing more than expected and inflation is cooling faster than expected is not a bad combination. We’re optimistic.

Purchase and Sale Activity During Q-2

The second quarter had more activity than usual for our portfolios.

We bought Lincoln National, Bread Financial, Canadian Solar, Mednax Inc., Wintrust Financial, Generac Holdings, Verizon, M.D.C. Holdings, and Petmed Express.

We sold Neogen, Warner Brothers Discovery, Kaman, Organon & Co, ASGN Inc, China Automotive, New Orient Education, Consensus Cloud Solutions, Mueller IND, and Ziff Davis.

As always, do not hesitate to reach out to our offices at (765) 455-1554 to discuss this.

Thank you for your continued trust and support,

Sycamore Financial Group

By Sycamore Financial Group|2023-07-22T01:38:42-04:00July 22nd, 2023|2023 Newsletters|0 Comments

Performance, Markets and The Economy

Hello from Sycamore,

Performance and the Markets

Our Growth and Income Composite gained just a bit less than 0.5% over the past year (gross of all fees). This is significantly better than the -7.7% by the S&P 500. Historically our strength has been to hold value better during market declines and it seems to be true again during this market cycle. We still expect the markets to do reasonably well in 2023. We know that there is a lot of concern about a pending recession, but we’ve now been hearing that for more than a year and we’ve not seen it yet.

As you already know, we do our own research and analysis to make security selections rather than send your money to a 3rd party manager or mutual fund to be managed. This means that we are ‘in the weeds’ each-and-every week. Currently, we see most companies growing earnings at a rate we’d normally expect. Of course, there are exceptions, but on the whole, we are still finding many bargains and we’re looking forward to an uneventful 2023.

The Economy

One of the primary reasons that we are in a higher interest rate environment is inflation. It continues to be a problem and the Federal Reserve is continuing to raise interest rates – although the rate of increase seems to be slowing and we believe we are near the top for now. Producer prices continue to drop, and we’ve found that the Consumer Price Index tends to follow. We’re hopeful that inflation will ease significantly this year. Also, the amount of money in our economy (M-2) is now shrinking. We believe that this will slow the inflation rate. Many economic indicators are performing well. Retail sales continue to be strong, and the consumer is a very large part of our economy. The unemployment rate remains at near record lows and our economy continues to create new jobs at a very good rate. New orders for durable goods are strong and even sales of existing homes and new starts are staging a nice recovery. We remain optimistic overall, and we believe that most companies can operate profitably in our current economic environment.

Purchase and Sale Activity During Q-1

During the 1st quarter of 2023, we bought Generac (GNRC), Paychecks (PAYX), IBM, ASGN, and ADP. We sold Sally Beauty (SBH).

As always, do not hesitate to reach out to our offices at (765) 455-1554 to discuss this.

Thank you for your continued trust and support,

Sycamore Financial Group

By Sycamore Financial Group|2023-04-26T22:13:02-04:00April 26th, 2023|2023 Newsletters|0 Comments

Consider Reviewing Your Insurance Package

Hello from Sycamore,

Insurance is a way to transfer risk from you to a larger group of people through a firm, the insurance company. For example, many people choose to insure against potentially bad outcomes that could be catastrophic like the death of the family earner in the case of life insurance or large unexpected medical expense through medical insurance. On the other hand, you may not choose to have collision or “full coverage” insurance on your $3,000 extra vehicle. Assuming a collision in which you walk away just fine but the car is totaled, the $3,000 loss may be something you can live with.

There are many forms of insurance: life, medical, homeowners, auto, disability, malpractice, and many more. All insurance has a time and a place. For example, we often review what, if any, life insurance you may have during our annual reviews. Life insurance can be a handy tool that you purchase when you need it but at times, we find that there are still policies in force that may not be needed anymore. On the other hand, we sometimes see situations where people are not insured to the extent that possibly they should be in areas like long-term disability or personal liability insurance.

Having the necessary insurance for your individual circumstances can be an integral part of your overall financial plan. It’s important to meet with your insurance agent periodically to review your overall insurance package to see where you may be over or under-insured. Of course, we would be happy to give you some general insurance guidance as well if you have any questions as you review your coverage.

As always, do not hesitate to reach out to our offices at (765) 455-1554 to discuss this.

Thank you for your continued trust and support,

Sycamore Financial Group

***This article is distributed for general informational and educational purposes and is not intended to constitute legal, tax, accounting, or investment advice.***

By Sycamore Financial Group|2023-02-14T01:21:22-05:00February 14th, 2023|2023 Newsletters|0 Comments

Fourth Quarter 2022 Economic Commentary

Hello from Sycamore,

Performance and the Markets

2022 is now in the books and while it wasn’t one to brag about, we feel that overall, during the last 10 years, the markets have been very good.

The question we’d all like an answer to is how will the markets fare in 2023? The short story is…we’re more optimistic about 2023 than we were about 2022. Before we tell you why let me tell you two things that you already know. One – We cannot predict the future. Two – we’re not market timers. With those thoughts in mind, we’ll be happy to share what we think about the next twelve months.

If you travel back to December 2021, you will remember how optimistic most projections were. The market had just finished a great year. At that time, most investors felt confident and were looking forward to a good 2022. However, we were a bit more cautious. If you look at your annual review follow-up letters we sent you from 2021, you will likely find that we were cautioned against expecting a continuation of the outsized market gains we’d been experiencing. Why? When we conduct our investment analysis, we study the earnings of companies and compare those to the current share price (this is a significant simplification of our research process) to determine if we want to hold that security. In 2022, earnings increased more than expected but not as much as share prices, so we were being cautious. We’ve learned that a strong defense can be as – if not more – important than your offense. What does this have to do with our thoughts about 2023?

During the 3^rd quarter of 2022, profits of the 500 companies in the S&P 500 index increased by about 9% vs the 3^rd quarter of 2021 (Source; S&P Global Market Intelligence). During this same 12-month period, the average share price of these same stocks declined by about 15%. From our perspective, the relationship between earnings and share prices has improved significantly. We are more optimistic about 2023, but we will continue to invest in your accounts with a strong defense.

Speaking of last year, let’s look at some final numbers. For the year ended 12/31/22, our Growth and Income Composite – gross of fees – declined 6.95% while the S&P 500 declined 18.11%. We are very pleased with our relative performance.

The Economy

First, let’s discuss inflation. For the last year, inflation has been a problem. The Federal Reserve has increased the interest rate over the last year to try to slow the rate of inflation and this seems to be having a positive effect. Additionally, we see that producer prices (commodities like corn and beans for example) have declined from an annualized rate of more than 20% earlier this year, to a more moderate annualized rate of less than 9%, and that decline appears to be continuing. This is good news.

Housing is a significant and weak sector. Interest rates are having a major impact on the sale of existing homes and now they appear to be starting to have a similar impact on new home construction. We expect both declines to moderate as buyers become accustomed to the higher interest rate environment, but in the meantime, housing is likely to be a drag on the economy.

Other economic indicators are in relatively good stead. The sale of automobiles, which have been steady throughout 2022 are beginning to trend higher. Unemployment continues to remain near all-time lows and the economy continues to create new jobs. In December we created more than 200,000 jobs and for the year 2022, we created about 4.5 million jobs. This is the second-highest total ever following the 6.7 million jobs created in 2021. Consumer Confidence, which has been declining slowly since mid-2021, seems to be heading north again.

We could talk about the economic data until your eyes glaze over, but suffice it to say that overall, we are cautiously optimistic about the economy during 2023.

Purchase and sale activity during Q-4

During the 4^th quarter of 2022, we were relatively inactive- we bought Alphabet and had no sales.

As always, never hesitate to contact us with any questions or concerns.

Thank you for your continued trust and support,

Sycamore Financial Group

*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.

By Allison Rumschik|2023-01-23T20:44:05-05:00January 23rd, 2023|2023 Newsletters|0 Comments