Quarterly Newsletter 2024 Q3
Momentum: (Noun) The quantity of motion of a moving object, measured as a product of its mass and velocity. Momentum can take many forms. Sports teams can gain or lose momentum with a single heroic play or score. Automobiles can create tremendous destruction when spinning out of control. Political candidates can come out of nowhere and win elections. The stock market can also gain momentum. As stock prices rise and rise, people can believe the market momentum will continue up forever. Likewise, when it falls, they believe it will fall forever. The stock market has had a tremendous run up since October. How far will momentum take us?
Investors who have stayed the course over the past several volatile years are being rewarded.
Navigate Private Wealth LLC has developed a system of Risk Allocation Models. Our system keeps us disciplined while seeking to take advantage of market volatility to maximize returns at each risk level.
2024 2nd Quarter Review
The second quarter of 2024 saw significant gains in the S&P 500, continuing its upward momentum. The index reached new all-time highs, driven by strong corporate earnings and positive economic data. Consumer spending remained robust and job growth exceeded expectations, further fueling market optimism. Despite some mid-quarter volatility, the S&P 500 closed the quarter up by 5.8%, marking one of the best quarterly performances in recent years. However, rising inflation and geopolitical tensions remain areas of concern, requiring cautious optimism as we move forward.
2024 3rd Quarter Preview
Will the upward momentum continue in the 3rd quarter? Good question. So far, the vast majority of analysts have underestimated stock market return for 2024. While it seems improbable for this growth to continue without interruption, it certainly could.
We anticipate more volatility in the stock market in the 3rd quarter. Interest rates are likely to stay fairly flat with one possible rate decrease if demand softens.
Bonds
The Aggregate Bond Index (AGG) has shown resilience, reflecting the market’s anticipation of potential rate cuts or a steady rate environment. Lower interest rates typically lead to higher bond values, making bonds an attractive option for investors seeking stability and income. We continue to see good value in bonds, especially with most being priced below par. As we progress through the third quarter, bonds are expected to remain a strong component of diversified portfolios, offering both security and potential appreciation.
US Stocks
The S&P 500 continued its upward momentum in the second quarter. Due to high valuations, with the Price to Earnings Ratio of the S&P 500 index at 27.45, a pullback is possible as the market adjusts. Navigate Private Wealth anticipates increased volatility, providing opportunities for strategic buying during market dips. We focus on companies with strong fundamentals and growth potential while maintaining a diversified portfolio to navigate potential market fluctuations effectively. Our risk allocation models are built to take advantage of market pullbacks.
While Navigate Private Wealth does not predict the top or bottom of the market, it looks like a very good time to capture some stock gains. The graph below shows the P/E ratio is above average for the past 10 years with the exception of the COVID years. Our clients can expect a portfolio rebalance soon.
International
China, the second largest economy in the world is having serious problems. The Hang Seng (Hong Kong stock market) has dropped by 20% since January due to low demand and high national debt. Government control, negative population growth and high costs of productivity should be ongoing challenges for China.
Other countries are doing better, but there is no compelling reason to increase international holdings at this point.
Hang Seng Index
Did You Know?
The modern era of the Olympics started in 1896 and are held every 4 years called an Olympiad. The last time the summer and winter Olympic Games were held in the same year was 1992 in Barcelona and Albertville. Now, the Winter Olympics are held in the first year and the Summer Olympics are the third year of each Olympiad.
Who has won the most gold medals in the Summer Olympics?
