Broker Check

October 2023 Newsletter – Check In For Strategy

October 2023 Newsletter – Check In For Strategy

Uniquely Waterstone for our unique Waterstone clients 

In this Issue: 

  • Basic Check In – Any changes?
  • WFS Investment Strategy Recap – Come for a visit!
  • Federal Reserve – On alert probably until 2025
  • CNR Speedometers – Strong neutral; improvement
  • Earnings Indications – Slower spending/slower earnings
  • Best Age for Financial Choices - 53
  • Medicare Check In – Reminder
  • Inflation Check In – Autos whew!

Basic check in – Any changes? 

How’s your health? 

How’s family? 

How’s income? 

Are you having enough fun?

WFS market strategy recap:

As indicated in the past newsletters, June 2023 was the first real opportunity to consider different strategies for clients. Here’s the road of caution to date:

  • We started our flexible/adaptable (big data) approach in 2018 when strategists were concerned about several scenarios that were anticipated by 2020. 
  • Poof! 2020 was the unexpected pandemic and govt cash infusion to help people weather isolation. 
  • March 2022 the Federal Reserve started raising interest rates to combat inflation from govt infusion (corporate support) in 2008/09 (never retrieved) and Pandemic support funding (consumer spending). 
  • All of this economic confusion could have knocked the markets for a major loop....but surprisingly the events didn't.  
  • We also had crypto currencies, meme stocks touted by social media, overly dominant technology stocks.

The market ebbs and flows in response to news but has held at this approximate level. The longer the market hovers, the longer is the opportunity to process the economic data of the world, the stronger the market builds a base at this level.

Some economists and portfolio managers eye the possibility of recession in 2024.  Some tout the start of a new bull market.  Hence, we repeat with confidence:  Our investment partners navigate on our behalf. 

We encourage you to come for an office or zoom visit to discuss the strategic models of your portfolios and discuss the fit with your life needs.

Knowledge is power!

Fed says likely 2025 to slow efficiently.         

The Fed has yet to reach its target rate of 2.0% inflation.  The trend is moving in the right direction. 

Starting March 2022, The Fed has implemented one of its most aggressive paths of interest rate hikes, an unprecedented total of 5.25 %. Banks also have been raising the standards for accessing credit. Combining the two is expected to slow the economy enough to bring inflation to target.

It will take time. Fed Chair Jerome Powell doesn't expect it to happen until 2025.  "Two percent is and will remain our inflation target." He repeats emphatically. 

CNR Speedometers® signal strong neutral/almost neutral.

This is CNR’s key view of market risks looking forward 6 to 9 months:   “Overly optimistic sentiment about economic growth prospects and the path of interest rates leave stock prices at risk for a correction or pullback, and we expect a less supportive environment to develop over the second half of 2023, as the Fed maintains their hawkish tilt, recessionary pressures build and earnings estimates are revised lower.

With the market rally being driven entirely by multiple expansions, corporate profit expectations remain the biggest source of downside risk.

In the meantime, we (CNR) remain focused on holding high-quality, reasonably valued US companies with durable franchises and strong management teams to help weather a recession should one occur.”

My favorite market cartoon!  

I saved a hard copy from its original printing.  Lo and behold, it was lost in one of the recent office moves.  Yeay for the internet! Pinterest:  saved by Pricilla Trevisan

Charlie Brown: “Well Lucy, life does have it’s ups and downs,  .” 

Lucy: “But why? Why should it? Why can’t my life be all UPS? If I want all UPS, why can’t I have them?…..Why can’t I just move from one UP to another UP? Why can’t I just go from an UP to an UPPER-UP?……I don’t want any Downs! I Just want Ups and Ups and Ups and Ups!”  

Thanks, Pricilla T!

An economy is people spending money – earnings!  

August and September have a reputation for being “seasonally weak” as they are the two worst-performing months on average since 1970. Over that 50+ year period, September is the only month with a negative average monthly return. In that regard, the major U.S. equity benchmarks did not disappoint. 

Earnings are starting to report with an anticipated softening.  It’s the Federal Reserve’s intention to slow the pace.  Higher rates make corporations and consumers think twice about spending.

There is thought and reason for a desired slowdown.  

Reminder: It’s Medicare Enrollment and Adjustment Season.

We defer these important discussions to our collaborating professional, Jayne Van Zile. Reach out to Jayne if you have ANY questions:

Auto Inflation:  The end of the economy car

Today there is only one new US car model under $20,000, the Mitsubishi Mirage at $19,205.  The average price of a new car is just above $48,000.  Roughly 5 years ago the Big Three Autos, Toyota and Honda jettisoned small sedans in favor of SUVs and trucks, the consumer choices. There are 32 new vehicle models in the US with retail prices exceeding $100,000.  These made up 14% of the total market in 2022.  In 2018, there were only 12 models. The Week, sept 8/15 2023 pg 37.

  • The average annual cost of auto ownership: buying/financing, insurance and maintenance by one estimate, is $12,000.  (AAA survey/research, NYTimes, 9/22)

Cars and homes are becoming unaffordable for more Americans. Debt grows.  The media stories can confuse us.  The math can confuse us.  All this reminds us that our investment partners navigate this on our behalf. 

The best age for financial choices:  53 or 54.  It reflects the accumulated knowledge, experience and maturity about spending, saving and applying it to your life. The 50s anticipate retirement and find a growing sense of urgency.  

 Earlier years of life are the stresses of learning and building. 

Later years of life are the diminished opportunity of time, the impact of change on physical and cognitive health and skill vulnerabilities.  

We’re here to help.

The Week, sept 8/15 2023 pg 37

Cruisin’ as a life experience?  Consider the Alaska destination while the unique water features (glaciers!) and unique way of life are still in place.  Nature is spectacular.

Amazon Prime offers “The Secret Life of the Cruise Ship” documentary for a behind the scene view of the extraordinary processes that make these floating communities work.  We found this perspective added an additional dimension to our sea experience to Alaska. 

Reach out if the idea of cruising is new and appealing to you.  Roths will share their recently learned novice tips.  This has been a new experience for us!

Note: Kathy will next be in the office October 27 to November 3. Cheers to Josh who is local, available and always appreciated.

Thanks if you've read to the end. You're our kind of people.
Reach out to us with your questions, comments, needs. 

Securities offered through American Portfolios Financial Services, Inc.(APFS) Member FINRA /SIPC. Investment Advisory Services offered through American Portfolios Advisors, Inc. (APA), an SEC Registered Investment Advisor. Waterstone Financial Services is not affiliated with APFS and APA. 

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