Created by: Fidelis Wealth Advisors

With the turn of the new year, we naturally shift our focus to the next 12 months to see what 2024 will bring us. Here are a few themes I’ll be watching as we enter a new year, in no particular order:

The Magnificent 7:
Not the Chris Pratt and Denzel Washington movie, but the 7 stocks that drove the majority of the return in the stock market in 2023: Apple, Google, Microsoft, Amazon, Meta (Facebook), Tesla, and Nvidia. If you expand these 7 stocks to the top-10 and include Berkshire Hathaway, Exxon Mobile, and United Healthcare Group, these 10 stocks were up 64% in 2023 compared to the other 490 stocks of the S&P up only 8%.** It was the year of the Magnificent 7, and perhaps the quote from Chris Pratt’s character, Josh Faraday, fits well here when he says, “So far, so good!”

Artificial Intelligence/Tech:
The theme of AI within Technology companies will continue to dominate the headlines. News out of CES, a large technology conference held every year, indicates impressive strides in artificial intelligence and the every-day use case that could be coming soon.

A year of the broadening?:
Much will be talked about this year related valuations of the stock market. The tech sector, on the backs of The Magnificent 7, is trading significantly above it’s 20-year average P/E multiple, while other parts of the market are not. Will this year be the year of the much discussed “broadening” where tech takes a backseat, or does the AI thesis continue to dominate investor sentiment?

Cash, money markets, and T-bills:
2023 was the first year in over a decade that yield was found in cash-instruments such as short-term T-bills and money market funds. Look for 2024 to continue this trend as the 3-month T-bill is still yielding 5.38% on an annualized basis.^

Inflation (or the lack thereof):
If 2022 and 2023 were dominated by high inflation, 2024 looks to buck the trend with inflation trending back to what would be historically normal levels. This doesn’t mean prices will fall (don’t we wish :-)), but that the inflation growth rate will normalize back to a more palpable number. The fall has been steady from 9.1% on headline inflation (June 2022) to the most recent print of 3.1% (November 2023), which has given us the belief that inflation may be leveling back to normal.*

Bitcoin hits the mainstream:
The Securities and Exchange Commission (SEC) recently approved a spot Bitcoin ETF, allowing investors to access this asset class via an ETF security. With the adoption of Bitcoin as currency in developing countries such as El Salvador, and indications that other Latin American countries may deem it legal tender in the near future, this approval by the SEC continues the accessibility to both retail and institutional investors on a much larger scale. In a stroke of poetic karma, these Bitcoin ETFs started trading exactly 15 years to the day after Hal Finney, believed to the be the first person to download and receive Bitcoin, tweeted, “Running bitcoin”, on January 11, 2009.

Election Year:
2024 is a major election year, not just in the U.S., but in much of the world. Dating back to just before World Ward II, the S&P 500 has only seen two down years in presidential election years, despite large intra-year volatility.

Hard, soft, or no landing?:
The most anticipated recession that has yet to come continues to be the topic of most economists. Will we have a soft landing (mild recession), a hard landing (deep recession) or no landing (we just keep flying with a good economy)? Most economist believe we can close the discussion on which “landing” we’ll get by the end of the year as we’ll have a more clear picture of where things are going.

New Coaches:
With the retirements of Bill Belichick, Nick Saban, and Pete Carroll, the football world will look to replace three iconic coaches, who between them won 7 Super Bowls and 9 College National Championships. Perhaps my favorite Nick Saban quote is, “Mediocre people don’t like high achievers, and high achievers don’t like mediocre people.”

There’s a lot going on and a lot of news to digest and understand how it plays into markets, investing, and the economy. Our job is to help you make good decisions with your money and build your financial fortress. We watch markets everyday so you don’t have to. As always, if you have any questions, please give us a call.

Created by: Fidelis Wealth Advisors

As we come to the end of the year, a question I receive a lot is: “What do I need to do before year-end financially?” 

There’s way more we should do than we can do, but here are the top-5 easy things to do that will make a difference:

1. Max out your 401K contributions:
   • If you haven’t maxed out your 401K contributions for the year, and have the excess income to do so, think about funding a little more into your long-term retirement bucket these next few pay cycles.
2. Make IRA contributions:
   • While you have until April 2024 to make your 2023 contributions, if you have the extra cash or know a bonus is around the corner, it’s never a bad thing to get these funded.
3. HSA Contributions:
   • Similar to IRAs, you have until April 2024 to make your 2023 HSA contribution, but seeing as this is one of the most tax-efficient vehicles that currently exists, you want to prioritize its funding.
4. Charitable Donations:
   • Make your charitable donations before December 31^st. If you have appreciated stock that qualifies, look to use this first over cash. Often a Donor Advised Fund can be useful organizing your donations.
5. Big Purchases in 2024:
   • Think ahead to 2024. Do you have any outsized purchases that you will be making. We want to be smart about how to invest your money and if you know a big purchase is around the corner, let’s talk about where best to park the cash in the interim.

Year-end is a busy and exciting time with many events and gatherings. Take 10 minutes to go through this check-list and determine if there’s anything you can do today.

Created by: Fidelis Wealth Advisors

The Ryder Cup was held this past weekend, a team golf tournament between the United States and Europe with a rich history. The tournament goes back nearly 100 years and is unique in that it takes what is predominantly an individual sport and turns it into a team event for one week, divided along continental and national lines.

The strategy is fascinating. Each team has a captain who decides which players will play in various 2-man team matches against their opponent, with the final day being head-to-head single matches. The home team has the added advantage of deciding how easy or hard the course will be set up. Every two years the tournament rotates between the U.S. and Europe, giving the home team the advantage.

The last 4 Ryder Cups have been dominated by the home team as they’ve each used deep insights and relied on heavy analytics to give their team the best chance at winning by setting up the golf course to favor their team. In each of these recent matches, the reliance on research, history, and analytics has paid off in blowout wins for the home team.

At this point you’re probably wondering if this is a golf article or an investing article!

There are a lot of parallels we can pull from Ryder Cup strategy to investing your money:

1. Research and Analytics Matter:  It’s possible in the future that the current era of Ryder Cup matches may be known as ‘The Analytics Era’ for how important they’ve become. Building an investment portfolio in an efficient way using thoughtful research and tested portfolio analytics is similarly important. A lot of thought needs to go into how a portfolio is constructed to help achieve your goals.
2. Economic Cycles Matter: Similar to how the golf course setup by the home team greatly affects the outcome of the Ryder Cup, the economic setup for portfolio construction parallels importance. For example, the past 18 months have been marked by rising interest rates. How your wealth advisors positioned your fixed income duration during this time has greatly affected your experience in this asset class.
3. Team Matters: The captain of each Ryder Cup is perhaps the most important decision-maker on the team. He gets to choose a handful of players who don’t automatically qualify and chooses who plays in which matches. Many times, winning or losing can be traced back to these decisions. It’s no different with your wealth management team. Having an experienced team, with good people who know how to navigate the investment landscape, and who will pick up the phone and explain your money to you, is key to the entire process.

Successful teams have similar qualities and proven processes. The Ryder Cup is perhaps the ultimate example of how leadership, decision-making, and the use of data can influence the outcome of an event.

Investing and money management are no different.

Created by: Fidelis Wealth Advisors

Everyone loves to talk about passive income. As a wealth advisor company, most of our daily conversations revolve around money, investing, and income. The ‘passive income’ conversation is at the top of the list of most-often talked about topics with existing and prospective clients. Everyone wants it and everyone wants to know how to get it.

Let’s start with the basics. What is passive income? Passive income refers to money earned with minimal effort or active involvement in a regular job. It’s usually generated from investments or business activities that require little day-to-day effort or work from an individual. My personal favorite jargon term for passive income is “mailbox money”. Examples of common passive income investments include: real estate, bonds, dividend stocks, royalties, or a minority investment in an operating business for which you don’t have any day-to-day involvement. The goal of most people is to create a large enough asset base, to generate sufficient passive income, to support their lifestyle until they die, which in turn, gives them access to one of the scarcest commodity in the world – time!

If you’ve always wanted passive income, where should you start?

Let’s start with the most basic of basic investments – a U.S. Government Treasury Bill. Bloomberg.com reports that a 12 month Treasury Bill is yielding 5.45% (8/28/2023). That means, if you have $100,000 burning a hole in your pocket, then you could earn passive income of $5,450 of interest over the next 12 months. That’s $14.93 per day. Probably not enough to retire on, but might be enough to pay for that annual vacation. Some of you reading this might have $500k or $1.0mm right now that isn’t being optimized as a passive income strategy. You can see how all of the sudden a 5.45% interest rate on $1,000,000 could be meaningful to you.

You need to start somewhere. Perhaps you only have $100,000 you can devote to a passive income strategy right now, but you’re not sure if ~$5,000 per year in passive income is even worth it. Everyone has different goals, but start early and create a passive income bucket. Add to it every year. If you don’t need the income, re-invest it, but if you stay disciplined, your passive income bucket can become real and meaningful to your family.

Those of the younger generation might be looking for growth investments and don’t want income; however, there are many searching for passive income opportunities. Here we highlighted just one opportunity – Treasury Bills, but there are many different asset classes that provide different types of income and growth opportunities that may fit your needs.

If passive income is something you’ve always wanted, but never knew how to achieve it, schedule a meeting with us today!