Quarterly Newsletter

The Federal Reserve cut interest rates an
additional 0.25% in December, bringing the target range to 3.5% – 3.75%. Rates are expected to remain between the 3-4% range through 2026 meaning few to no cuts are currently priced in.

Markets continue to make gains following the April lows. International equities continue to outperform year-to-date, supported by the weakening of the dollar.

International markets have provided the highest returns this year, with the MSCI International Index gaining 19.46% and the MSCI Emerging Index up 15.57%. Portfolios that were globally diversified experienced less volatility and higher returns YTD.

International markets and bonds have provided the most stability this quarter, with the MSCI International Index gaining 6.35% and bond prices rising due to falling interest rates. Portfolios that are diversified across asset classes and geographies have held up the best.

A recent study reviewed the 2024 S&P 500 return estimates from 20 prominent banks and asset managers, made at the end of 2023. The closest estimate was off by 12% and the median prediction missed by 23% versus the actual return. Be cautious with forecasts for 2025.

Crime related to fraudulent new accounts
is responsible for 80% of all identity fraud reports. If you haven’t already, consider freezing your credit at TransUnion, Experian, and Equifax to help prevent unauthorized credit cards and loans being opened in your name.

A recent Vanguard study highlighted the
difficulty in market timing: If an investor invested $100,000 from 1996 to 2024 into a balanced 60/40 portfolio and left it alone, it would be worth $865,000. If they tried to time the market and missed out on just the best 5 days, they would be left with $659,000. Similarly, they would have $540,000 if they missed just the best 10 days.

In the past four years, the S&P 500 has
experienced two bear markets resulting in declines of more than -33% in 2020 and -24% in 2022. Despite these declines, the S&P 500 has gained more than 58% over this period. Focusing on the bigger picture and tuning out the short-term noise is helpful in maintaining your long-term strategy.

In 2023, Elser Financial clients gifted more
than $8.6 million tax efficiently to charities
through donor-advised funds and qualified
charitable donations. Thank you for giving
back to your communities!

The Federal Reserve held interest rates
steady in September, but kept open the option of another rate hike in the near term. They forecasted that rates may stay above 5% through 2024 due to a resilient labor market.