The Weekly Update 9/27/2024
Where you should focus your attention NOW!
About twice a day someone asks for my take on the upcoming Presidential Election. My standard reply is that “no one knows the future, not even me!”
However, I have been honored to watch these types of elections over the last 43 years. The person occupying the White House today is the 7th President during those four decades, other than living in the White House, all seven had one thing in common.
- Half the country despised them.
During those 43 years the DJIA went from 777 on the day I sat down at my Quotron, in 1982, to over 42,000 at present.
As investors, we understand the rest of the scary world happens on the edges and if all the “stuff” happening on the edge’s effects Corporate America, well Corporate America never got the memo!
In the chart below, notice the earnings of Corporate America are on the rise…from all time record highs. Why does this matter? Because the market Valuations are supported by company earnings.
Here is the source cited, fact-based data flow:
As family members of TWSG you know Sign #1 (Personal Consumption Expenditures), PCE, represents about 68.30% of our entire U.S. economy (source: JP Morgan Guide to the Markets. 6-30-2024). For consumers to spend they must have money.
In the chart below, it is crystal clear that we now have record household incomes, and these are adjusted for inflation.
To which a normal response might be, well the collective population might have income (cash flow) but they don’t have any assets (net worth).
“Not True”! In fact, and source cited from The U.S. Federal Reserve 3-31-24, household net worth now rests at, yup, a record high at over $80 trillion! Also, the household debt we are told is so scary has remained between 10%-15% of household net worth, for the last ten years.
You likely already know cash in money markets, savings and checking accounts, etc are “The Fuel” that pushes market values higher, i.e., money flows to where the returns are better.
And there is plenty of fuel, as in $6.3 trillion in money markets, also per The Federal Reserve.
I did not say market valuations go straight up, and I did not say without volatility. There are an average 31, -1% down days per year. There are an average 10, -2% down days per year. There are an average 4, -3% or more down days per year.
Don’t fret, panic or worry if the “normal” back and fill comes knocking. It will not be as scary as the business news will tell you. Instead, I think the knocking will be an opportunity and here at TWSG, we will pounce on that, for now just pray that it comes!
At TWSG, we are well allocated for this and have our well thought out Investment Selection Matrix™, investment menu working in our collective TWSG family’s asset allocations.
I’m interested in your thoughts, comments and observations. Feel welcome to call, email, or stop by the office and say Hi.
Respectfully,
James O. Lunney, CFP®
CERTIFIED FINANCIAL PLANNER™ Professional
Securities and advisory services offered through LPL Financial, a registered investment advisor. Member FINRA/SIPC. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.
All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested in directly. The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful. Stock investing includes risks, including fluctuating prices and loss of principal.
Asset allocation does not ensure a profit or protect against a loss. Value investments can perform differently from the market as a whole. They can remain undervalued by the market for long periods of time.