PFA Updates

Investment Committee Update

Nov 29, 2023

Hello Friends,

In our last market email, we reviewed a negative third quarter in the markets, only to be followed by a pretty ugly October. Well, the Santa Claus rally might be a thing this year, because the S&P 500 has risen +10.73% since October 27, 2023 and is now just -0.65% below its July 31, 2023 YTD closing high.[1] From a seasonality perspective, we're coming into a better time period for the market because the fourth quarter is typically the best quarter of the calendar year.[2] Big picture, for the 2023 calendar year, all stock indices are positive, though US Treasury bonds remain slightly negative.[3] Expect to see a positive increase in your November investment statements - a nice Thanksgiving gift to all.

Your Investment committee "dipped its toe" back into the market near the October 27 low with a small purchase of an ETF that we like. We will continue to look for opportunities to increase our stock allocations with a potential full rebalance back to normal risk allocations sometime in 2024. We will have to see what the markets and economy bring in the new year. Remember, it will be a presidential election year in 2024 ,and although that may bring concern, we don't feel you need to worry about your accounts because historically, presidential election years are typically positive for the markets.[4] Below are some bullet point quotes of interest:

Positive Comments about the Economy and Markets

- "oil prices fell more than 4% to their lowest level since August" [5]

- "the inflation rate has fallen from 9.1% in June of 2022 to 3.2% in the last reading" [6]

- "85% of S&P 500 companies have beaten EPS estimates by an average of 7.44%. These strong results are a testament to the strength of the economy and management teams’ ability to manage their business in a period of slowing growth by streamlining their cost structures." [7]

- "Stocks fell 7% in September and October. It was the worst decline we've seen for those months since 2008. But according to history, the pain won't continue. Instead, we likely will see double-digit gains over the next year." [8]

- "When investors are fearful, they pile into cash. And when they're feeling confident, they flood back into the market. The amount of cash on hand recently surged to a record high of around $1.6 trillion. We're at a very high point right now. Based on history, we can expect investors to pour money back into stocks at some point soon. [9]

- There are certainly things to celebrate: the drop in yields, the cooler inflation trend, the stock market rally, the seasonal tailwinds that November and December tend to bring, and the likely end of the rate hiking cycle. We can also celebrate that as it stands today, unemployment is low, and the economy is adding jobs at a healthy rate.[10]

Keep the faith friends and enjoy your holiday season. Let us know if we can answer any questions regarding your investment accounts or financial plans.


PFA Investment Committee











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