Monthly Market Insights | August 2024

If you're concerned with the recent volatility in the market, it might make sense to get a second opinion on your portfolio. We don't have to manage your investments to give you a second opinion. We offer hourly or flat fee consultations where we analyze your portfolio and let you keep your portfolio where it is so you can implement our proposed changes yourself.

However, if you'd like us to manage your portfolio we can help. We can also help you develop a plan to grow, protect, and eventually liquidate your wealth in a tax efficient manner to replace your paycheck and help you maintain your stanard of living in retirement.

Wealth Management

If you have a portfolio of at least a $1 million you'd like us to manage, you qualify for our new wealth management service. Our fee starts at 0.6% of your portfolio annually, which is well below the industry standard of 1%. This service also includes full service financial planning, tax prep for your individual taxes and the ability to create a Will-Based or Revocable Living Trust - Based Estate Planning documents at no additional cost.

What's In Your Estate Plan?

To close out the summer I'm waiving the initial fee for new and returning ongoing financial planning clients for the month of August. The ongoing financial planning program also includes tax prep for your personal taxes. Don't miss this limited-time opportunity to achieve financial success at a significant discount to our normal pricing. Regular prices are:

• $999 Initial Fee and $400 per month for individuals
• $1,499 Initial Fee and $600 per month for couples

I recommend a minimum of six months for this service, but you can cancel anytime. You can learn more about our fees and services at the links provided.

U.S. Markets

Stocks edged higher during a volatile month of trading as investors monitored economic reports about the Fed’s next move with short-term interest rates.

The Dow Jones Industrial Average led in July, picking up 4.41 percent. The Standard & Poor’s 500 Index added 1.13 percent while the Nasdaq Composite struggled, slipping 0.75 percent.1

A mistake is valuable if you do four things with it: recognize it, admit it, learn from it, forget it. John Wooden, whose UCLA Bruins men’s basketball team won 10 NCAA national championships in a 12-year period, including a record seven in a row.

Fed One Step Closer?

Stocks opened the month strong, supported by a Consumer Price Index report that showed inflation dipped in June. The Personal Consumption Index, an inflation measure closely followed by the Fed, offered additional evidence that inflation was slowing. Some concluded this news may bring the Fed one step closer to adjusting short-term rates.2

Tech Under Pressure

The rally came under pressure mid-month, however, as investors turned away from technology issues to focus on small-cap names and the Dow Industrials. Investors anticipated that small caps and blue chips would be among the first stock market groups to benefit if the Fed cut short-term rates. The Russell 2000, a barometer for small-cap stocks, gained over 10 percent in July.3,4

Fed Chair Says ‘Rate Cut’ on the Table

As the month came to a close, stocks regained their momentum in the days leading up to July’s Fed meeting. When Fed Chair Jerome Powell indicated a September rate cut was "on the table," stocks saw a broad-based rally on the last day of trading.5

Sector Scorecard

Ten of the eleven S&P 500 sectors finished the month in positive territory, led by Real Estate (+7.24 percent), Financials (+6.40 percent), Utilities (+6.82 percent), Industrials (+4.92 percent), Materials (+4.34 percent), and Healthcare (+2.66 percent).

Also posting solid gains were Energy (+2.25 percent), Consumer Staples (+1.66 percent), Consumer Discretionary (+2.79 percent) and Communication Services (+0.15 percent). The technology sector lost -3.29 percent for the month.6

What Investors May Be Talking About in August

In the month ahead, expect attention to continue shifting to the election on November 5.

While much of the attention tends to focus on the presidency, it’s important to remember that 34 Senate races, all 435 House seats, and a host of other state and local initiatives will be on the ballot.

Here are three takeaways to consider:

• Expect the unexpected — Speeches, debates, and other comments from presidential candidates can lead to new information being released. Speculators can overreact to how a proposed policy idea may affect the economy and the financial markets.
• Anticipate market volatility — Historically, September and October have been the most volatile months for stock prices. Mix in some election uncertainty this year, and price swings may again mark September and October.7
• Remember your portfolio — There’s an old saying that goes, "You might care more about the election than your portfolio." Remember that your goals, time horizon, and risk tolerance should guide investment decisions, not election cycles.

World Markets

The MSCI-EAFE Index gained 2.89 percent in July as markets rallied globally.8

European stocks performed well, with the UK (+1.40 percent), Spain (+1.11 percent), France (+0.45 percent) and Germany (+1.50 percent) notching gains.9

Pacific Rim markets were mixed. India’s Sensex index rose 3.43 percent while Japan’s Nikkei lost 1.22 percent, and China’s Hang Seng index fell 2.11 percent.10

Indicators

Gross Domestic Product (GDP)

The economy grew 2.8 percent on an annualized basis in the second quarter, exceeding the 2.1 percent expected by economists and doubling the first quarter’s 1.4 percent annualized pace.11

Employment

Employers added 206,000 jobs in June, compared with the 218,000 jobs created in May, which was slightly more than economists expected. The unemployment rate inched up to 4.1 percent, while average hourly earnings rose 3.9 percent year-over-year in June—the smallest wage gain since 2021.12

Retail Sales

Retail sales were unchanged in June, defying economic forecasts that called for a slowdown. Retail sales were supported by increases in a number of areas, including online sales, clothing, and building materials. Excluding autos and gas, retail sales rose 0.8 percent in June.13

Industrial Production

Industrial output rose 0.6 percent in June, higher than the 0.3 increase expected. All three industry groups—manufacturing, mining, and utilities—rose, with consumer goods (particularly autos and energy) contributing the most to the increase. June’s expansion followed a 0.9 rise in May.14

Housing

Housing starts rose 3.0 percent in June from an upwardly revised May pace, led by gains in multifamily starts–especially in the Northeast and Midwest. Year over year, total starts fell 4.4 percent as higher mortgage rates created headwinds for homebuilders.15

Sales of previously owned homes slumped 5.4 percent in June, marking a gradual shift from a seller’s market to a buyer’s market as inventory finally started to catch up with demand. The median sales price was up 4.1 percent year-over-year to $426,900.16

New home sales fell 0.6 percent in June, driven by decreases in the Northeast and Midwest. The median new home sales price was $417,300, and inventory was 9.3 months.17

Consumer Price Index (CPI)

Consumer prices declined 0.1 percent in June, better than economists expected. It was the third month in a row that inflation cooled and the first monthly decline since May 2020. Core inflation (CPI minus volatile food and energy prices) rose 0.1 percent in June.18

Durable Goods Orders

New orders of manufactured goods designed to last three years or longer declined 6.6 percent in June, compared with May’s 0.1 percent increase. The decline was led by transportation orders.19

The Fed

The Federal Reserve left interest rates unchanged at the 5.25-5.5 percent target range following its two-day meeting that ended on July 31.20

In its policy statement, the Federal Open Market Committee (FOMC) downgraded its level of concern around inflation, leading some to be more hopeful for a rate move at the September meeting.

At the press conference following the announcement, Fed Chair Powell added, "A reduction in the policy rate could be on the table as soon as the next meeting in September. We’re getting closer to the point at which it’ll be appropriate to reduce our policy rate, but we’re not quite at that point."20

Different Ways You Can Work With Us

Wealth Management - Combines ongoing financial planning and investment management. The financial planning fee is waived if we manage at least $1,000,000 in investments for you. You can review our investment management fee structure here. Tax Preparation and the ability to create a Will or Revocable Trust-based Estate Plan will be included.

Ongoing Financial Planning - Starting at $400/month, our most popular program now includes tax prep. This is a good fit if you have several goals and want the option to manage your investments. We'll cover everything from spending, insurance, taxes, investments, retirement planning, and estate planning. Our goal is to give you and your family an easy-to-understand comprehensive plan to provide you with confidence you're making the right financial decisions.

One-Time Financial Plan With Ongoing Support - Starting at $4,800, this is an accelerated version of the service above with additional support for one year after your start date. This service requires prepayment for the year and is offered at a significant discount from the annual pricing for ongoing planning. Tax Preparation and the ability to create a Will or Revocable Trust-based Estate Plan will be included.

Tax preparation is now part of the ongoing financial planning program. This will be in addition to the Tax Report we already generate for clients and our work with the IRS Withholding Calculator to help prevent our clients from getting a surprise tax bill.

Three-Hour Ask Me Anything - This is a good fit if you have 2-3 goals you want help with. These three one-hour meetings need to be completed within three months. The fee for this service is $2,000. You also get a free 30-minute meeting to help us get started.

Financial Coaching - Our financial coaching program starts at $99/month. This is ideal for someone who is looking to simplify and automate their finances. We'll also serve as an accountability partner and help you overcome obstacles that may be stopping you from accomplishing your goals. You can learn more about our coaching program here. If you think this program might be a good fit for you, schedule a 15-Minute Demo.

Hourly Financial Planning -Billed at $400 per hour. For each hour of meeting time, we'll bill at least one additional hour for meeting preparation and follow-up.

Our Full-Service Process For New Clients

Net Worth and Budget

The first thing I do for new clients is assess their current financial situation. We do this with the aid of financial planning software. We review assets, liabilities, income, and expenses. If you'd like to test drive my comprehensive financial planning software, visit Right Capital and create a profile. View this Right Capital video to learn more.

Insurance

As a Fee-Only Firm, we don’t sell insurance or charge commissions. However, we like to review home, auto, and umbrella insurance to make sure you have the proper coverage. We’re happy to work with your existing agent or refer you to an independent broker to make sure you get the best deal. We also look at your employee benefits, long-term and short-term disability insurance, along with life insurance to make sure your family is protected.

Tax Preparation and Tax Planning

Tax preparation is now part of the ongoing financial planning program. This will be in addition to the Tax Report and Tax Planning we already generate for clients. We also use the IRS Withholding Calculator to help prevent our clients from getting a surprise tax bill.

Investments

Whether you want us to manage your investments or you want to manage them yourself and you're just looking for a second opinion, we can help. We'll help you optimize your investments to make sure you’re not leaving any money on the table. Here’s an example of the quantitative analysis I can do for your investment accounts where we also evaluate your current fees.

If you’d like to review your risk tolerance, complete our risk tolerance questionnaire. This will give you your personalized risk number as seen on page 1 of the sample portfolio above. Feel free to check out the article 10 Best Tips for Beginning Investors from U.S. News where I shared a few investment tips.

Goals

This can include everything from saving for college, buying your first home or an investment property, and paying for college.

Retirement Planning

This is where we bring everything together. Take a look at the links below for examples of some of the deliverables we prepare for clients.

Get Your Free Retirement Check Up

Elements® Financial Monitoring App

One Page Financial Plan

Financial Independence Presentation

Estate and Legacy Planning

If you're looking for a cost-effective solution to get your estate planning documents in place, we can help. We have partnered with a leading Estate Planning platform to deliver high-quality Estate Planning documents for a fraction of the cost of working with an attorney. I included a blog post below that highlights the key documents that should be in your Estate Plan and my normal pricing.

What's In Your Estate Plan?

Revocable Living Trust-Based Estate Plan

Individual - $1,600

Couple - $2,100

Will-Based Estate Plan

Individual - $900

Couple - $1,400

Previous Updates

2024 Important Numbers

5 Steps for Handling an Unexpected Tax Bill.

Estate Planning at Any Stage of Life

Financial Health Checkup

Maximize Your Employee Benefits

Equity Compensation

Reduce Taxes, Mid-Year Check-In

Tax Preparation and Financial Coaching

Find That Lost 401(k)!

Saving for College and 529 Plans

Mother's Day: Best Financial Tips for Mothers

How Much Do You Need To Make Work Optional?

By the Numbers: Record Highs & Lows