Setting Goals and Maintaining Discipline
image: olympics.com
The first half of 2024: Markets, the economy and celebrating olympic athletes.
As the world gathers in Paris for the 2024 Summer Olympics, we are reminded of the incredible power of unity, competition, and the pursuit of excellence. The Olympics also symbolize the importance of preparation, position, and long-term vision—principles that are equally vital in guiding your financial journey.
Financial Markets
The first half of 2024 has been marked by impressive performances in the stock markets. Much like the top athletes who stand out in their sports, a select group of companies has driven much of the market's success. In the U.S. ten companies account for approximately 37 percent of the stock market’s overall weight.
While it’s exciting to witness the market’s concentrated advance, we believe that it is essential to remain diversified. Just as a coach wouldn’t focus their athlete solely on one contest, the balance beam for example, we avoid becoming over-reliant on any single asset type or class. Diversification, along with rebalancing are tools to help us manage risk and achieve more stable, long-term returns.
In this rising market, we are evaluating rebalancing opportunities. Rebalancing is a proactive step that helps ensure we stay on course, regardless of market conditions. Whether markets are rising, falling, concentrated, or full of breadth, rebalancing helps align investments with financial goals.
Economy
U.S. economic growth has been stronger than expected this year, led by consumer spending and companies spending to replenish inventory levels. The inflation rate-of-change, as measured by the consumer price index (CPI) continues to come down from its June 2022 high. We anticipate the U.S. Federal Reserve will begin cutting interest rates later this year, potentially in September. Once the Fed starts cutting short-term interest rates, we expect the yields available on short-term savings, CDs, and money market funds will also decline. On the flip side, the cost of borrowing money could lower, which can be a tailwind for economic growth.
As we celebrate the achievements and spirit of the 2024 Summer Olympics, let’s remember the importance of zooming out and taking a long-term view, beyond just the highlight reels of a given quarter. Just as athletes train for years to compete at the highest level, we believe successful investing requires setting goals and maintaining discipline through the ups and downs of markets.
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