Broker Check

Monthly Market Commentary - May 2024

May 09, 2024

At Landmark Wealth Management Group, keeping our clients informed about market developments is a priority. Here are a few important topics that are worth your attention. Feel free to reach out if you have any questions or wish to engage in further discussion.

In the first quarter of 2024, real Gross Domestic Product (GDP) fell short of investor expectations, reporting a 1.6% increase1. Although we have seen recent increases, inflation is gradually approaching the Federal Reserve's stated 2% target2, while unemployment remains low at 3.9%3. These positive economic indicators have been surprising to investors, who anticipated a more destructive impact from the historic interest rate tightening cycle. However, in a recent press release4, the Federal Reserve showed hesitation about considering the task complete. Ongoing concerns with the persistence of inflation were cited as a key reason to hold rates steady. As a result, the focus remains on the Federal Reserve, with investors eagerly watching for signs of interest rate easing.

Shifting from the economy to the markets, the first quarter of 2024 started the year similar to what we observed in 2023, with the Large Cap Growth asset style leading the way. According to YCharts⁔, the total return of the Russell 1000 Growth index was 11.41% in Q1, compared to 8.99% on the Russell 1000 Value index. After growth stocks had impressive returns in 2023, many investors may feel pressure to move into these positions. Although fundamentally they have some of the best companies in the world, we believe a portfolio approach centered around diversification is important. Let’s take a look at the past two years of returns for these two indexes:

Source: YCharts

If you’re a value investor, it’s easy to see the recent 42.68% return of the Russell 1000 Growth Index and feel left out. I’d urge you to expand your view to include the year prior when comparing indices to learn a few valuable lessons. In 2022, the Russell 1000 Value Index provided much better downside protection, outperforming growth by 21.60%. Although Growth outperformed by 31.22% in 2023, it wasn’t enough to overcome the losses in 2022 compared to value.

Here are three lessons I’d like the readers to take away from this:

  1. A diversified approach can be attractive for investors; it allows similar returns over long time periods, while avoiding a bet entirely on a specific part of the market.
  2. Results can vary dramatically over short time periods; prudent investing requires patience.
  3. Limiting drawdowns plays a big role in helping clients reach investment goals; it allows for compounding and often takes time to realize results.

If you would like to discuss this information further, please reach out to your Landmark Advisor to see how we can help.

Sources:

  1. Bureau of Economic Analysis, https://www.bea.gov/news/2024/gross-domestic-product-first-quarter-2024-advance-estimate
  2. Bureau of Labor Statistics, https://www.bls.gov/news.release/cpi.nr0.htm
  3. Bureau of Labor Statistics, https://www.bls.gov/news.release/empsit.nr0.htm
  4. Federal Reserve, https://www.federalreserve.gov/newsevents/pressreleases/monetary20240501a.htm
  5. YCharts, https://www.ycharts.com

SEC registration does not constitute an endorsement of Landmark Wealth Management Group  by the SEC nor does it indicate that Landmark Wealth Management Group has attained a particular level of skill or ability.  This material prepared by Landmark Wealth Management Group is for informational purposes only.  It is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation of any particular security, strategy or investment product. Information presented herein is accurate as of the time it was written. Advisory services are only offered to clients or prospective clients where Landmark Wealth Management Group and its representatives are properly licensed or exempt from licensure. No advice may be rendered by Landmark Wealth Management Group unless a client service agreement is in place  This material is not intended to serve as personalized tax and/or investment advice since the availability and effectiveness of any strategy is dependent upon your individual facts and circumstances. Landmark Wealth Management Group is not an accounting firm. Please consult with your tax professional regarding your specific tax situation when determining if any of the mentioned strategies are right for you.