Welcome to our Weekly Wealth of Knowledge for August 14th! We invite you to explore the latest regarding financial planning topics, our Moneco community, market trends, and more.
This August, our focus is on “Money” where we offer insights and resources supporting a path towards effectively balancing and achieving your financial goals and milestones.
In this issue:
- Moneco Insights – Savings Basics (3 min read)
- Got History? (1 min read)
- August 2024 Market Update (2 min read)
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Moneco Insights – Savings Basics
Building a strong financial foundation starts with effective saving, which is crucial for achieving long-term goals and managing unexpected expenses.
Our Insights blog outlines the essential saving strategies, from setting clear financial goals and creating a budget to automating savings and choosing the right accounts. By understanding the basics and avoiding common pitfalls, enhancing your savings potential and working towards a secure financial future is possible.
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Got History?
Later this week, the Fairfield Museum and History Center of Fairfield, Connecticut celebrates Tavern Night. A lead advisor here at Moneco is a sponsor for the event and admits that he enjoys both the legacy and history of the town in which he lives and works. “Got history?” is a deeper question to ask of your advisor.
Many of our Moneco advisors live and work in the communities where they serve clients and are vested in doing good while doing well by supporting regional and local organizations such as this one. We are proud of this and hope to cross paths with you in the office or in the community soon! If you are in the Fairfield area and have an interest in history, consider checking out the evening event on August 17, 2024 or visit the family-focused events available at the Center earlier that day. Learn more in the link below.
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August 2024 Market Update
Stocks must have gotten the memo that August tends to be weak historically. July, the eighth positive month in the past nine, was quickly forgotten as the beginning of August greeted us with a selloff.
The primary catalyst was August 2’s weaker-than-expected employment report, which ignited concern that the U.S. economy could tip into recession.
Several additional factors exacerbated the selling pressure:
- Overly bullish sentiment and elevated valuations. Investor sentiment had become a bit frothy, particularly in the tech sector, and stocks had simply gotten a bit ahead of themselves.
- The historically weak month of August is a logical time for a selloff to reset investor sentiment to more normal levels.
- Increased scrutiny around the payoffs for artificial intelligence (AI) investments. This scrutiny followed some evidence of slowing consumer demand during second quarter earnings season.
- Leverage in the financial system. Borrowing in the yen (the so-called carry trade) is unwinding as global markets fall and the yen surges — plus some institutional traders appear to have been caught offsides in the downdraft, driving more forced selling.
So, what now? First, this is not the time to panic. Remember, pullbacks and corrections — as painful as they are — are a normal part of investing.
Think of them as tolls to pay on the road to attractive long-term returns. The S&P 500 and its predecessor indexes have gained 11.5% annualized since 1950, through some of the worst wars, terrorist attacks, recessions, financial crises, pandemics, and natural disasters in history. And that’s while averaging a drawdown of over 10% per year – even in up years.
Turning to potential catalysts for a rebound, perhaps the most obvious one is the Federal Reserve (Fed). A 0.5% rate cut in September is now firmly on the table, and an emergency, intra-meeting cut, though unlikely, is possible if the economy weakens further. Simply put, restrictive monetary policy is no longer necessary. Expect the Fed to quickly get to a neutral stance, despite the perception that they might influence the election. “Higher for longer” created room for cuts.
Other drivers that could help turn stocks around include better economic data, reassuring commentary from corporate America, and more progress unwinding leveraged trades. Fundamentals still look good enough to keep this bull market going even as the economy slows into the election. Additional downside may be modest, and opportunities may soon emerge, but bottoming is a process. Be patient and allocate wisely.
As always, please reach out to your financial advisor with any questions.
Important Disclosure: This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.
References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results. Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services.
All index data from FactSet. The Standard & Poor’s 500 Index (S&P500) is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.
This research material has been prepared by LPL Financial LLC.
Securities and advisory services offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates.
RES-0001658-0724W | For Public Use | Tracking #612201 (Exp. 08/2025)
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Important Information
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.
Moneco Advisors, LLC and LPL Financial are not affiliated with any other referenced entity.
This commentary reflects the personal opinions, viewpoints and analyses of the Moneco Advisors employees providing such comments, and should not be regarded as a description of advisory services by Moneco Advisors or performance returns of any Moneco Advisors client. The views reflected in the commentary are subject to change at any time without notice. Nothing in this commentary constitutes investment advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Moneco Advisors manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.