Patience...

2024 didn’t end the way it started but it ended up being a positive year for investors.  The S &P 500 added a positive 2% during the quarter, cooling off somewhat after a stellar 23% increase ending in the third quarter.  Artificial Intelligence (AI) stocks, the Magnificent 7, were up nearly 67% to lead all in the large cap sector.  Although the S & P 500 is expensive by historical standards, in 2024 we did see a broader participation by other companies within the index. All this positive news in the markets was fueled further by the much-anticipated rate cuts pre-election. Investors seemed to be even more excited about the election results given the anticipated tax cuts, less regulation, and continued rate reductions to follow by the Federal Reserve. However, post-election excitement receded in December as investors and market experts began to evaluate what the new administration policy effects could be on the economy, consumers and the markets.  The sell-off in the final weeks of December in the markets was caused by investors positioning themselves on what might take place going forward.  As we sift through the months ahead, we may see heightened risk of volatility spikes and periodic downturns which is why investor discipline is warranted.  That said, you could also see upward spikes based on less regulation and anticipated tax cuts. You could almost raise your hands and say I am not sure how all of this plays out.   

Are investors optimistic, emotionally spent or climbing a wall of worry as we move into the first quarter of 2025?  No one really knows.  What we do know is that there is an aggressive agenda ahead and there are more unknowns that we need to navigate through in 2025. This kind of reminds us of the 1946 classic film “It’s a Wonderful Life”, where George Bailey’s journey is much more than a heartwarming Christmas tale. It’s a story that teaches us, as investors, the value of perseverance just as George faced many challenges and setbacks, he remained determined and resilient, just like investors have endured unknowns for over 100 years.   We as investors, just like George, can remain optimistic despite the uncertainties ahead.  We emphasize the importance of staying diversified within your portfolio given not everything can be controlled due to changes in policies that may or may not affect you as an investor.  

Anticipation or speculation as to what may take place based on what source investors follow can cause investors to react in the short-term, which can ultimately result in a negative impact.  We believe that understanding risk and allocating to the needs of each investor has resulted in successful outcomes no matter what changes occur.  The first quarter ahead may provide us with a clearer picture as to what changes may take place.  Keep in mind that whatever short-term hurdles we face as investors the long view is what keeps us grounded.  We have taken profits in portfolios, in anticipation of future needs since we never know when the markets will decline.  

We all need to remind ourselves that the reason we develop diversified portfolios is to take the emotion, speculation, and anticipation out of our hands.  We hope that the year ahead is a healthy one and prosperous one for you, your family and friends.  Looking forward to our next conversation. 

^{IMPORTANT DISCLOSURES: The opinions presented in this communication are subject to change without notice and no representation is made concerning the actual future performance of the markets or economy.  Information obtained from sources is considered reliable but is not verified.  The research and other information provided herein speak only as of its date.  We have not undertaken and will not undertake any duty to update the research or information or otherwise advise you of changes in the research or information.  The performance information presented is not an indication of future results and index data is provided for market reference purposes only.  This is not an offer to buy or sell or the solicitation of an offer to buy or sell any security/instrument or to participate in any trading strategy.  This document is the property of Legacy Financial Advisors and is intended solely for the use of the Legacy client, individual, or entity to which is addressed.  This document may not be reproduced in any manner or re-distributed by any means to any person without the express consent of Legacy.  This material is for educational purposes only.  Mis-transmission is not intended to waive confidentiality or privilege.}