Three Cheers for 2023!

Wow! November and December were great months in the stock market. After a painful August through October, the markets rallied mightily to end the year. The dynamic change from depression to euphoria was due to the shift in interest rate expectations. Instead of the consensus that the Federal Reserve would keep rates higher for longer, the market now believes that the Federal Reserve will cut interest rates in 2024…maybe as early as March. Lower interest rates will allow companies to borrow at cheaper rates, driving economic growth.

Of course, this is all “expectation” and is subject to change. Due to the extremely fast run up in the market in November and December, the market is currently “overbought” or “expensive”, so we are conservatively positioned entering 2024. While we are hopeful that 2024 will be another good year, we expect a volatile first quarter which will lead to additional opportunities. So if you have cash available for investment, transfer it to your brokerage account so that we can deploy it at the appropriate time.

The U.S. Economy has a lot going for it in 2024. Even though the Inflation Reduction Act was signed into law in 2022, the money allocated to fund U.S. infrastructure upgrades is just starting to be spent. This government spending will continue to drive economic growth from a project perspective and from a personal expenditure perspective since unemployment should remain in check. In addition, presidential election years are normally positive for the stock market since incumbents “do what they can” to keep the electorate happy so that they have a better chance to be re-elected in November.

If you turn 73 years old in 2024, this will be the first year that you are required to take a minimum distribution from your IRA. The amount of your RMD is determined by the balance of your account on January 1, 2024. Fidelity will make the calculations and your RMD will be listed on your statement starting in February. We will contact all new RMD clients early in the year to discuss your options.

Very truly yours,

Michael Cantlon
Thomas Guyett
Robert Gephart