February 2024 – Newsletter
Don’s Annual Letter
The behavior of the equity markets over the last two years can be summarized in two sentences:
In 2022, the Dow, the S&P 500, and the Nasdaq 100 experienced peak-to-trough declines of 21%, 25%, and 35%, respectively. By the week before Christmas 2023, all three reached new highs on a total return basis (including dividends).
WHAT YOU’LL FIND INSIDE:
- DON’S ANNUAL LETTER
- WELCOME ELAYNA DUBY
- ELECTRONIC DELIVERY ISSUE RESOLVED
- 2024 TOP TRAVEL DESTINATIONS
- A PLAN FOR ALL SEASONS
What should matter most to us long-term, goal-focused, plan-driven equity investors is not why this happened but that it happened. Specifically, that there could be a very significant bear market over most of one year and that the next year, those declines could be entirely erased.
I want to remind you of a few of the philosophies I believe in.
- The economy cannot be consistently forecast, nor the market consistently timed. I believe that the highest probability of capturing equities’ long-term returns is simply to remain invested all the time.
- Declines in the equities market, though frequent and sometimes quite significant, have always been surmounted as America’s most successful companies adapt to overcome the obstacles they face.
- Long-term investment success depends on following the plan that was established for you. Investing based on anticipating, or reacting to, current economic, financial or political events most often fail in the long run.
I remain convinced that the long-term disruptions and distortions resulting from the pandemic are still working themselves out in the economy, the market, and society itself. In response to the pandemic, there was a 40% explosion in the M2 money supply which ignited inflation. To try to curb the inflation, the Fed implemented the fastest interest rate spike in its 110-year history. Both the bond and equity markets cratered in response.
Despite the interest rate hikes, the economy, except for the housing sector, has remained relatively robust. Capital markets have recovered significantly. Speculation now centers on how much the Feds may lower interest rates in 2024, and whether a recession may be in our future. These outcomes are unknown and do not lend themselves to forming a rational long-term investment policy.
Trends in the U.S. federal deficit and the national debt continue to appear unsustainable. Social Security and Medicare appear to be on the paths to eventual insolvency unless reformed. The serial debt ceiling crisis continues, and a bitterly partisan presidential election is looming. The markets will face significant challenges as they do every year.
My overall recommendation is to stay focused on the long-term. If your goals have not changed, adhere to the financial plan we have in place for you.
As always, thank you for placing your trust in Paramount Wealth. It is a privilege working with you.
Founder and President, PWM
**Please note – Our office will be closing at 1:00 pm on January 2, for a staff holiday celebration **
From all of us at Paramount Wealth, we wish you a healthy and prosperous New Year!
Feb 15 – Raymond James begins mailing 1099 tax statements
Feb 19 – Financial Markets closed for Presidents Day. Paramount office will be open.
Feb 28 – Raymond James mails amended 1099s and those delayed due to specific holdings and/or income reallocation.
March 15 – Final day for Raymond James to mail any original 1099s and continued amended 1099s as needed.
March 29 – Financial Markets closed for Good Friday. Paramount office will be open 8:00 am – 1:00 pm.
Welcome Elayna Duby
Having worked as a Financial Service Representative for a local bank, she brings experience in both the financial industry and in servicing clients. We are so pleased to have her!
Elayna was raised in Hillsdale and still lives there with her husband, Dorion, who was her high school sweetheart. They have a cat, Scout, and a Chocolate Lab, Smokey. Elayna is an avid reader and also loves to hunt for Petosky stones up north.
Join us in welcoming Elayna to the Paramount family!
Electronic Delivery Issue Resolved
Some of our clients received a notification from Raymond James that although they elected to receive certain shareholder material via electronic delivery, a recent attempt to send the material electronically had failed, and as a result, delivery preferences may have changed to paper.
We have confirmed with Raymond James that this was a server error by a third party that emails shareholder material.
The issue has been resolved and clients will begin receiving shareholder materials again electronically. Contrary to the instructions indicated in the notification received by clients, there is no action that clients need to take to continue to receive shareholder information electronically.
If you would like to see the shareholder information from December, log in to Client Access, click on the Documents tab, then click on the Shareholder Documents tab, and then filter the date for December 2023.
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A Plan for All Seasons
Starting Fresh – Things to do:
- Organize for tax time: Prepare for smooth filing: By early February, you should have tax forms in hand. Make sure to organize them in a dedicated spot, as well as any receipts if you itemize. To ensure all is in order, talk to your advisor about coordinating with your tax professional.
- Get set for 65: This is the age you become eligible for Medicare; a 10% premium penalty applies for each your you go without Part B coverage beyond this birthday in most cases. You have seven months to enroll, starting from three months before your birth month. Ask your advisor about healthcare planning resources that can guide you.
- Become a benefits whiz: Research your company’s open enrollment schedule and decide if you need to make changes.
- Fine-tune your health spending: If you participate in a flexible spending account (FSA) or health savings account (HSA), review contribution levels to take full advantage – without exceeding limits, which are adjusted regularly for inflation. If you have an FSA, use available funds before your plan’s use-it-or-lose-it deadline.
- Finesse your bonus: Plan how you want to use your year-end bonus, consider paying down high-interest debt, shoring up your emergency fund, or increasing your 401(k) contribution.
- Pay yourself first: If you haven’t automated retirement contributions, start now. It’s also a good time to reconfirm your employer match and increase your contributions to allow more time to generate tax-deferred gains.
- Revisit an IRA: Pre-tax contributions to IRAs can reduce taxable income, and Roth IRAs might be the answer if you’re above income thresholds to make a tax-deductible traditional IRA contribution. You have until tax filing deadline (not including extensions) to contribute for the current tax year.
Don Hershberger, CFP®, AIF®, CRC®, Founder and President, PWM, was named on the 2023 Forbes Top Wealth Advisor Best-in-State list.
Jackson, MI 49203
2023 Forbes Top Wealth Advisors Best-In-State, developed by Shook Research, is based on the period from 6/30/2021 to 6/30/2022 and was released on 4/4/2023. 39,007 nominations were received and 7,321 advisors won. Neither Raymond James nor any of its advisors pay a fee in exchange for this award. More: https://go.rjf.com/3KsXbF7. Please see https://www.forbes.com/best-in-state-wealth-advisors for more info.
Any opinions are those of the author and are not necessarily those of Raymond James. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. All opinions are as of this date and are subject to change without notice.
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