Skip to main content
Smishing Texts

Urgent Alert: Beware of Smishing Text Scams Targeting Schwab Clients

Written by Minich MacGregor Wealth Management on . Posted in Uncategorized.

Smishing Threat Campaign

Schwab has alerted us that there is an active phishing text campaign in which clients receive a text message from an international number and it mentions a disbursement from the client’s account. It then asks to click on a link to log into their account to verify the transaction.  

  • The texts are coming from different international phone numbers.
  • The texts notify that an ACH was debited from their Schwab account, typically in the thousands of dollars.
  • The text then instructs the client to cancel the disbursement if they did not request it, by replying “Y” and clicking on the link provided.
  • The link’s URL is a variation of a spoofed Schwab domain For example https://schwbba.com, https://schwabd.com, https://schwbab.com, etc. 

Be aware:

  • Schwab does not notify client about completed transaction via text message.
  • Schwab does not send out text messages from international numbers.

Keep in mind: Unlike many other attacks, smishing isn’t necessarily an indication that the client has been compromised—the attackers send a message to a large number of randomly chosen phone numbers, hoping some of those people will respond. 

Steps to follow if you suspect smishing:

  • Take a screenshot of the text and forward it on to phishing@schwab.com (Make sure the phone number is visible).
  • Delete the text message.
  • We strongly encourage you to add security measures on your Schwab accounts, such as two-factor authentication and verbal password. 
  • Report suspicious or fraudulent activity in your accounts as soon as possible, including if you entered your Schwab credentials into a fake website.

Note: If you have clicked on the phishing link, you should run an anti-virus and anti-malware scan on your device.

Remember:

  • Do not click on links or attachments included in a text message. 
  • Slow down if a message is urgent. Urgent account updates and limited time offers are red flags of possible smishing. Remain skeptical and proceed with caution. 
  • Avoid using links or contact information from the message. Go directly to the official channels/websites.
  • Double check the phone number. International numbers or odd looking numbers, such as 4-digit phone numbers, are tactics that scammers use to mask their true phone number. 
  • Do not enter your Schwab credentials or other personal information via an unverified link. Instead, enter the address you are familiar with directly into your browser to visit the trusted website to log in as usual. 
  • Double check that the URL is not a subtle variation of the real one.
  • Do not call phone numbers received through unsolicited messages. Always use a verified number that you have used in the past or is found on your account statement.

We are here to help.  Please feel free to reach out to us if you have any questions.

Visit our Cybersecurity page to learn valuable tips on safeguarding yourself and your finances from hackers, scammers, and identity theft.

Scrollable

2024 Year in Review image

2024 Year in Review: Lessons Learned & Navigating Uncertainty in Investing

Written by Minich MacGregor Wealth Management on . Posted in Featured, News, Posts, Uncategorized.

Every January, we here at Minich MacGregor Wealth Management look back on the year that was. What were the highlights? What were the “lowlights”? What events will we remember? Most importantly, what did we learn? Then, we send a Year in Review message to our clients that encapsulates it all. We thought you might be interested in seeing it this year, too.

When we ponder the last twelve months, the theme of 2024, to us, is the importance of being able to operate under uncertainty. Here’s what we mean.

When the year began, there were several question marks hanging over the economy, the markets, and the nation as a whole. Each question mark, on its own, was important. Putting them all together made it extremely difficult for investors to know how the year would play out, which way the markets would go, or how the economic climate would evolve. In other words, there was a great deal of uncertainty. Let’s go through a few of the most important question marks one by one.

Which Way Will Inflation Go? The New Year kicked off with a positive outlook. Consumer prices had fallen significantly toward the end of 2023, and the expectation was that the trend would continue. But inflation rarely moves in a straight line. The inflation rate hovered around 3.1% in January, but by March, it was back to 3.5%.1  Inflation, it seemed, was still “sticky.”

This wasn’t pleasant news for the markets, because it dashed any hope that the Federal Reserve would cut interest rates in the spring. And the longer interest rates remained elevated, the more people worried about the possibility of a recession. As a result, the markets experienced a short-but-sharp dip in April.2 

Fortunately, the angst was short-lived. Over the next six months, inflation fell to 2.4% — the lowest since February of 2021, and awfully close to the Fed’s goal of 2%.1  That led to a long-awaited event in September, when we finally got some clarity on the second question mark:             

When Will Interest Rates Start to Come Down? Interest rates — the Fed’s primary tool for combatting inflation — began the year at 5.3%.3  That was the highest they’d been since early 2001. But while higher rates are effective at bringing prices down, the reason is because they cool down the economy. But if rates remain too high for too long, that coolant can ice over — and freeze the economy with it. Because of this, and because lower rates tend to juice the stock market, investors had been waiting with bated breath for any signs that rates were on the verge of coming down. Finally, in September, it happened: The Fed announced the first rate cut. Another one followed in October, and a third in November. By the end of the year, rates were down to 4.6%.3  That’s still historically elevated, but it’s a step in the right direction. That’s because we were also getting a positive answer to the third question mark:

Will the Economy Grow, or Slow? Predicting a recession has become something of a parlor game for economists. It’s not hard to understand why. Historically, raising rates to pull down inflation has almost always led to a recession. It’s called a hard landing, and it happens when prices come down so much that most businesses experience a major drop in revenue, causing them to lay off workers. Since unemployed people tend to spend less money, the economy contracts and enters a recession.

Despite years of dire predictions, this worst-case scenario never came true. Our gross domestic product, which measures our country’s total economic activity in a given period, grew by 1.6% in the first quarter, 3% in the second, and 3.1% in the third.4  As of this writing, we don’t have firm data for Q4 yet, but it’s estimated to be around the same.5 

Against all odds, for now, it seems we’ve achieved something rare: A soft landing.  

What About the Election? The fourth question mark was perhaps the least important as far as the markets were concerned, but it was also the one that got the most headlines: The November election.

Elections always create uncertainty, of course. Who will our next president be? What policies will they enact? How will they help or hurt my personal situation? History suggests that it doesn’t really matter which party controls Washington as far as the markets are concerned, but despite that, we do often see volatility leading up to the election itself. But that didn’t really happen this year. Other than a slight, brief dip at the very end of October, there was not a lot of volatility before the election, nor right after.6  Which brings us to our final question mark:

How Will the Markets React to All This? For investors, this was the biggest question mark of all. It’s always the biggest question mark of all. How would the markets react to the roller coaster of inflation? How would they react if it took longer for interest rates to drop? What about the election?

Well, now we know the answer to that, too. The S&P rose over 23% for 2024.7  When you couple that with the 24% gain we saw in 2023, it’s the best two-year performance in the index since 1997-98. The Dow, meanwhile, gained nearly 13%, and the NASDAQ over 28%.7   

Because we are looking back, because we know the answers to all these questions, it’s hard to remember the uncertainty that crept up at different points in the year. Nevertheless, uncertainty existed — and the investors who could handle it, benefited. The ones who could not, did not. We’re very happy to say that our clients belonged to the first group, but we know many people who didn’t.

Throughout the year, especially early on, we would often hear acquaintances of ours say things like, “I’m not getting into the markets until after the election.” Or “I’ll wait until interest rates come down to make a decision.” “Inflation is still too high for me, so I’ll think about it next year,” also popped up from time to time. In other words, many investors find it difficult to operate under uncertainty. Any question mark causes them to defer decisions and delay actions. Uncertainty can cause people to shut down, circle the wagons, and “turtle up.” As a result, two things happen:

  1. They miss out on the kind of year we just experienced in the markets.
  2. They don’t move forward to their financial goals.

Uncertainty is a fact of life, and as investors, we will always be dealing with question marks. Some years, there are more question marks than others, and that can certainly make things stressful. Of course, when we’re faced with uncertainty, it’s always good to slow down, take our time, and consider our options carefully. But it’s not good to become stagnant, hesitant, or fearful. It’s never good to procrastinate.  

Scientists have often held that one of the hallmarks of intelligence is the ability to make judgments under uncertainty. The ability to plan ahead even with limited information, and then adjust your plan as you learn. This is something that our team strives to do every day for our clients. We consider what we know and what we don’t. We try to identify possible outcomes and events, not to predict which will happen — which is impossible — but to prepare for as many as we can. From there, we determine what choices must be made now, which choices can be made now, and which should not be made now. Finally, we review the options that come with each choice, and which work best for each client based on their specific goals, needs, and situation.

It doesn’t mean everything will always go the way we want it to. It doesn’t mean we won’t occasionally experience setbacks. It does allow us to operate under uncertainty…which means we can always help our clients continue to work towards their dreams and financial goals.     

That’s what financial planning is all about. And that, to us, is the lesson to take from 2024.

Of course, there will be question marks in 2025, too. Here are just a few:

  • Is the inflation roller coaster truly over? Consumer prices ticked back to 2.6% in November, and there are some indications that they may rise higher still in the coming months.
  • President-elect Trump has promised to levy across-the-board tariffs against China and many other countries. What effect will those tariffs have on the economy, especially inflation?   
  • Will interest rates continue to fall, or will they remain where they are for a while? In its most recent statement, the Fed projected only two cuts for 2025.8 
  • Much of the market’s performance over the last two years has been generated by tech companies, especially those investing in AI. However, to date, many AI companies are valued far above what they are actually earning. Will that change in 2025? Will the hype continue?     

Here at Minich MacGregor Wealth Management, we’ll continue to study these issues…and even though you are not currently a client, we will update you as we get answers. But while there will always be question marks, we remain confident in our direction and in our ability to keep moving forward — whether the horizon is clear or blurry, the sky blue or gray.

So, that’s 2024! We hope it was a wonderful year. On behalf of our entire team, we look forward to making 2025 even better. As always, please let us know if you have any questions, or if we can ever help you and your family the way we help our client families. Have a Happy New Year!

Sources:
1 “12-month percentage change, Consumer Price Index,” U.S. Bureau of Labor Statistics, https://www.bls.gov/charts/consumer-price-index/consumer-price-index-by-category-line-chart.htm
2 “U.S. Equities April 2024,” S&P Dow Jones Indices, https://www.spglobal.com/spdji/en/documents/commentary/market-attributes-us-equities-202404.pdf
3 “Federal Funds Effective Rate,” Federal Reserve Bank of St. Louis, https://fred.stlouisfed.org/series/FEDFUNDS
4 “Gross Domestic Product,” U.S. Bureau of Economic Analysis, https://www.bea.gov/data/gdp/gross-domestic-product
5 “GDP Now,” Federal Reserve Banks of Atlanta, https://www.atlantafed.org/cqer/research/gdpnow/archives
6 “S&P 500 ends 5-month rally with October downturn,” S&P Global, https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/s-p-500-ends-5-month-rally-with-october-downturn-86066097
7 “S&P 500 posts 23% gain for 2024,” CNBC, https://www.cnbc.com/2024/12/30/stock-market-today-live-updates.html
8 “Fed cuts key interest rate but signals elevated inflation is likely to persist,” https://www.nbcnews.com/business/economy/federal-reserve-interest-rate-cut-december-2024-much-economy-rcna184586

Scrollable

Picture of a Melting Snowman

Michelangelo’s Snowman

Written by Minich MacGregor Wealth Management on . Posted in Uncategorized.

One cold January morning in 1494, the citizens of Florence, Italy woke up to an extremely rare sight: Their city was covered in snow. 

Snow is uncommon in Florence, and this was no mere coating of powdered sugar.  There was so much snow that kids today would probably grab their sleds and hightail it to the nearest hill.  So much snow that trucks with plows would be required just to keep the roads clear. 

It’s impossible to know how most Florentines reacted to their new winter wonderland, but we do know what one person thought.  When Piero de Medici, perhaps the wealthiest and most powerful man in Florence looked out that morning and saw his courtyard covered in snow, he decided to commission an artist. The artist in question was young, barely nineteen, with a permanently disfigured nose.  But his name would become famous throughout Europe, and the world has never forgotten it.   

His name was Michelangelo, and his task was as surprising as it was simple: Build a snowman.

Given the sculptures Michelangelo produced later in life, it’s reasonable to assume that his was the most beautiful snowman ever made.  (At least one other artist wrote that it was very beautiful.)  But we have no way of knowing exactly what Michelangelo’s snowman looked like…because it melted. 

It’s ironic to think of a great work of art so impermanent that it could literally melt.  It almost seems like a waste.  Why go to all that trouble creating something beautiful, knowing it will never last?  But we don’t think it was a waste.  In fact, when we ponder the story of Michelangelo’s snowman, we think there’s something meaningful we can take from it. 

Every January, many of us set New Year’s resolutions.  We make promises to ourselves about the goals we want to achieve and the ways we want to improve.  Go there, become this, do that.  But we all know that resolutions don’t always last.  Often, we may follow through on them for a month, or a season, or even a year…until life interrupts us.  When that happens, we often move onto other things, leaving our resolutions to melt away. 

But that doesn’t mean our resolutions were a waste.  It doesn’t mean the work we put into them was worthless. 

Think what often happens even when we fall short of our resolutions:

  1. Sometimes, we return to our resolution months or years later, now armed with more knowledge and the experience gained from our first attempt.  Everything we need, in other words, to actually achieve it this time.
  2. Sometimes, we may not achieve everything we set out to do, and yet our lives still become better for the attempt.  A person may not lose the 20 pounds they wanted, but the 10 pounds they did lose helped their blood pressure drop and their knees feel better.  A person may not quite learn how to speak French, but in the process, discover they have a real love and ability to cook French food.
  3. Sometimes, even half-finished resolutions may lead us to the things we are truly meant to do.  Maybe you won’t “write in your journal every day” like you wanted, but instead learn you have a flair for writing and decide to write something else.  Maybe you won’t get that promotion you wanted…but instead get a different job that you end up loving more than you ever thought possible. 

Whenever we set goals and resolutions, whenever we lift our eyes up and aim just a little higher, we are shaping our lives into our own works of art.  Sometimes they don’t last – but the beauty is not in their permanence.  It’s in the ways they enrich our lives. The ways they help us get just a little closer to where we want to go…and become just a little more like who we want to be. 

Michelangelo’s snowman melted.  We don’t know what it looked like.  But we do know that he created something beautiful.  Something that enriched both his life and the lives of those who saw it, even if only for a little while. 

And we know something else, too.  We know what came after. 

For just ten years later, Michelangelo created a new sculpture, one that we can hope will never be lost to temperature or time.

It was the statue of David.

As we enter a New Year, we wish you best of luck with your goals and resolutions.  Please let us know if there is ever any way we can help you achieve them.  But most of all, we wish you joy in the journey.  May your resolutions get you ever closer to where you want to go…and become stepping stones and practice runs for whatever works of art you’re destined to create.

Happy New Year!   

Winter Tips to Save Your Home and Wallet

Written by Minich MacGregor Wealth Management on . Posted in Uncategorized.

Winter may bring snowy landscapes and cozy evenings by the fire, but it can also bring unexpected challenges for your home and budget. To make this season more about enjoying the cold and less about battling it, follow these practical tips to protect your space, save energy, and stay comfortable.

Scrollable

Questions You Were Afraid to Ask # 15

Written by Minich MacGregor Wealth Management on . Posted in Uncategorized.

The only bad question is the one left unasked. That’s the premise behind many of our posts. Each covers a different investment-related question that many people have but are afraid to ask.

In recent posts, we’ve been breaking down some of the more common bits of financial jargon that you are likely to hear in the media.  In this message, let’s look at: 

Questions You Were Afraid to Ask #15:
What’s the difference between Large Cap, Mid Cap, and Small Cap stocks?

If you’ve ever researched a stock or listened to talking heads in the media, you’ve probably heard terms like “large cap stocks” before.  You may also have seen these terms when reviewing your 401(k).  If so, you’ve probably wondered what the word “cap” even means. 

A stock’s “cap” refers to its market capitalization.  This is the total market value of a company’s available stock shares.  In essence, it is a quick and easy way to determine how valuable the market perceives a company to be. 

To determine a company’s market cap, investors look at all the shares the company has made available and then multiply that number by its current stock price.  For example, let’s say the ACME Corporation has twenty-five million available shares with a current stock price of $50.  Twenty-five million multiplied by fifty is 1,250,000,000, so ACME’s market cap is $1.25 billion.

Now, this number doesn’t mean anything on its own.  It’s when you compare it to other companies that distinctions can be made.  That’s where the terms large, mid, and small come in.

There is no single agreed-upon definition of what makes a company large-cap versus mid-cap, or mid-cap versus small-cap.  But generally speaking, many investors break down these categories like this:

  • Large-Cap: Market value over $10 billion
  • Mid-Cap: Market value over $2 billion
  • Small-Cap: Market value over $250 million

So, in our example, ACME Corporation would be classified as a small-cap company. 

Some investors will make further distinctions.  For instance, you may sometimes see the term mega-cap, which is for companies with a market value over $200 billion.  At the other end of the spectrum, micro-cap refers to companies with a market value of less than $250 million. 

When people think about the stock market, they often think in terms of a specific index, like the S&P 500.  But different indexes often only contain companies above a specific size.  For example, the S&P 500 contains the five hundred biggest companies in the overall market. That means it only includes mega- and large-cap stocks.  Another popular index, the Russell 2000, contains only small-cap companies. 

One reason market cap matters is because it gives you more information about a stock than you can get just from its price.  For example, imagine two companies that each have a stock price of $75.  The first company has fifty million total shares available.  The second company has a billion shares.  That meansthe first company has a total market capitalization of $375 million.  The second company’s market cap, on the other hand, is $75 billion.  So, despite having the same price per share, the first company is a small-cap stock, and the second is a large-cap stock. 

Why is this important for investors to know? Because a stock’s cap can dramatically affect both its potential risk and potential reward. 

Generally speaking, large-cap stock companies are not going to grow as fast as a small-cap stock company can.  That’s because the former simply doesn’t have as much room for growth.  Large-cap companies tend to be older and more well-established. As a result, any future growth will likely be slow and steady rather than fast and explosive.  Small-cap companies, on the other hand, still have the potential to become large-cap companies in the future.  That means their potential for growth — and thus, reward — is greater. 

That said, large-cap companies have also tended to be more stable.  They have stronger financial situations, greater brand recognition, and more revenue.  That makes their stock price less vulnerable to market volatility.  Meanwhile, small-cap companies, even if they’re growing fast, may not technically be making any profit at all.  Their financial situation may be much weaker. That makes them much more vulnerable…and much riskier for investors. 

Of course, these are all just generalizations.  Large-cap companies can sometimes experience fast growth or even fail, of course.   Mid- and small-caps can thrive for years.  But as a general rule, there is an inverse relationship between a stock’s capitalization and both its risk and return.  Understanding that relationship is critical to making good investment decisions! 

So, that’s market capitalization in a nutshell.  Next time, we’ll look at a related bit of jargon: Blue chip stocks versus penny stocks.  Until next time! 

1 “Market Cap Explained,” FINRA, https://www.finra.org/investors/insights/market-cap

Happy Thanksgiving image

Happy Thanksgiving

Written by Minich MacGregor Wealth Management on . Posted in Uncategorized.

🦃🍂 HAPPY THANKSGIVING 🍂🦃

Today, we pause to reflect on all we’re grateful for—family, friends, and the moments that bring us together.

Here at Minich MacGregor Wealth Management, we are thankful for our relationships with our clients and for the opportunity to help you however we can.

We wish you a day filled with love, laughter, and, of course, delicious food!

Earth image of North America

The Pale Blue Dot

Written by Minich MacGregor Wealth Management on . Posted in Uncategorized.

On February 14, 1990, the Earth was being watched. 

The object watching Earth was small; small enough to fit inside a four meter-large cube.  And it was distant, being over 3,000,000,000 miles away.  It is even farther away now—in fact, it recently became the first man-made object in history to venture into interstellar space. 

It was the Voyager 1 spacecraft. 

Voyager 1 is a probe built by NASA, launched in 1977 to study the outer Solar System.  Its primary mission was to study the planets Jupiter and Saturn and their various moons.  Having accomplished this, the probe is now winding down its secondary mission, which is to study the distant regions beyond the planets before it loses power and becomes destined to drift through the Universe as a mute, lonely messenger until the end of time. 

But this post isn’t about Voyager.  It’s about Earth. 

On that date in 1990, Voyager 1 had completed its primary mission.  Carl Sagan, the famous astronomer, and author, asked NASA to turn the probe’s camera around to take one last photograph of Earth and the other planets.  Between February 1 and June 6, Voyager took sixty still images.  Each image contained about 640,000 individual pixels, and as the probe was so far away, it took about 5½ hours for each pixel to reach Earth. 

The most famous of these photographs was of our home planet—now just a pale blue dot amidst the infinite blackness of space. 

If you’ve ever seen this photo, you know what a stirring, thought-provoking image it is.  Imagine our great, grand planet … filled with life, oceans, mountains, deserts, forests, and cities, reduced to nothing more than a speck.  It serves to illustrate just how small we really are compared to the unceasing vastness of the Universe.  But it also serves another, more powerful purpose. 

April 22 is Earth Day, a celebration of our planet, of nature, and of the importance of protecting the environment.  Hundreds of thousands of people will observe the event in their own way, but many more will probably fail to remember that Earth Day exists at all.  After all, there are already so many holidays demanding our time, our attention, and our money.  Most of us probably don’t even get Earth Day off from work.

And yet, we wonder if we wouldn’t attach more importance to Earth Day if we all took a few minutes, once a year, to simply look at that pale blue dot.  Because there’s something else the picture illustrates, something we should all remember. 

Take a minute, to pull up the picture on your computer.  Search for “pale blue dot” on Google® or go to this address at http://en.wikipedia.org/wiki/Pale_Blue_Dot to see it directly.  After you look at the single pixel that is our planet, gaze around the edges of the image.  What do you see? 

Nothing. 

Of course, we know that the Milky Way galaxy isn’t empty.  It’s bursting with stars, cosmic rays, solar wind, clouds of dust, asteroids, comets, and even other planets.  But it contains no other life, not that we’ve found.  The closest planet potentially capable of supporting life is so far distant, it would take millions—millions!—of years to get there.  That’s longer than our species has even been alive. 

Until further notice, we are alone. 

Our pale blue dot is just one of billions in the night sky, but it is unique.  We are on an island amidst a dark, silent ocean.  An oasis inside the barrenness of space.  A single, precious garden surrounded totally by desert. 

What the pale blue dot photo really shows is that our planet is significant.  It’s all we have.  It shelters us, sustains us, provides for us, and entertains us.  If there is another world richer and more beautiful than ours, we’ve yet to find it. 

In short, we’ve been given the greatest gift of all. 

This is why Earth Day is important: because it’s our chance to reflect on what we can do to truly deserve that gift.  It is our chance to reflect on how we can protect it, because it certainly needs protecting. 

This April 22, we invite you to celebrate Earth Day.  Even if you do nothing else but feel the warmth of the Sun on your face, smell the flowers in bloom all around you, and ponder the depths of the night sky, it will be enough.

And as you celebrate Earth Day, ponder the words Carl Sagan left us about our precious, pale blue dot. 

The Earth is the only world known, so far, to harbor life. There is nowhere else, at least in the near future, to which our species could migrate. Visit, yes. Settle, not yet. Like it or not, for the moment, the Earth is where we make our stand. It has been said that astronomy is a humbling and character-building experience. There is perhaps no better demonstration of the folly of human conceits than this distant image of our tiny world. To me, it underscores our responsibility to deal more kindly with one another and to preserve and cherish the pale blue dot, the only home we’ve ever known.  

Carl Sagan, Pale Blue Dot: A Vision of the Human Future in Space (Ballantine Books, 1994)

On behalf of all of us here at Minich MacGregor Wealth Management, Happy Earth Day! 

March Madness Jumbotron

2024 Q1 Market Recap

Written by Minich MacGregor Wealth Management on . Posted in Uncategorized.

Did you fill out a March Madness bracket this year? 

If you did, or if you ever have before, you know what a challenge it can be to predict what will happen during the annual NCAA Basketball Tournament.  Maybe you should just pick the higher-seeded team in every game.  After all, they’re seeded higher for a reason, right?  Or maybe you think a lower-ranked team will surprise everyone and beat one of the favorites.  It happens every year, doesn’t it?  Or maybe you’ll just look to see which teams enter the tournament on a “hot streak” and bet their winning ways will continue. 

Or maybe you’ll just pick whichever mascot you like best.

Whatever strategy you use, every decision forces you to question what you think you know.  Is that top-seeded team’s record for real, or does it hide the real story?  If that underdog David manages to slay the heavily favored Goliath, will it continue winning, or will its story end in the next round?  Does Team A’s superior shooting outweigh Team B’s better defense?  The fact is that there are a million ways to guess, but there’s no single way to know. 

The reason we mention all this is because many investors are facing a similar March Madness-style dilemma with the markets right now. 

Last year, the markets surprised many experts who had predicted a recession by going on a tear.  The S&P 500 finished 2023 up 24%.1  That hot streak continued through the first quarter of 2024.  The S&P gained 10.2% in Q1, its best start to a year since 2019.  The NASDAQ finished up 9.1%.  And the Dow saw a 5.6% gain.2 

This performance was largely driven by one thing: Expectation.

Now, expectation always drives the markets, more or less.  Market performance is dictated by what investors expect will happen in the future based on data they’re seeing now.  In a sense, every investor, expert or amateur, is filling out their own version of a March Madness bracket whenever they make a decision, but for individual companies rather than individual teams…or for the markets as a whole. 

What’s less common is when such high expectations are centered around two very specific things:

  1. That the Federal Reserve will lower interest rates sometime in the near future.
  2. That the potential of AI will yield major profits for companies down the road.

Because many investors expect that one or both things will happen, they want to be positioned to take advantage of them when they do.  So, more money flows into the stock market – especially into companies that would seem to benefit most from these developments – and we experience the kind of quarter that we just saw. 

But now, that leaves investors with questions.  Questions that are eerily like what sports fans ask themselves when filling out a bracket. 

  • Is this performance real…or is it a mirage? 
  • Is it sustainable, or just temporary? 
  • Are we in a bull market…or a bubble? 
  • Does Metric A matter more than Statistic B?  Or should I only pay attention to Indicator C? 
  • Should I just invest based on whichever company logo I like best?

Okay, that last one isn’t real.  But the rest are real questions that investors – expert and amateur – are asking themselves. 

And just like with your bracket, there are a thousand ways to guess the answers.  For example, here are a few arguments – all based on statistics – for why the market’s Q1 performance is “real.”  (Which is to say, sustainable.) 

Inflation is much lower than it was last year, and the Fed has specifically said it wants to cut rates this year.  By the end of February, the Consumer Price Index was at 3.2%, whereas in February of 2023, it was at 6%.3 

The economy remains strong.  Corporate earnings appear healthy, the most recent unemployment rate was 3.9%4, and the Fed’s latest estimate was a 2.5% increase in GDP during Q1.5 

The market’s performance is actually broadening.  It’s an open secret that a major portion of the market’s gains last year were driven by just a small handful of tech companies.  (Most of which are major players in the AI race.)  But that portion broadened significantly in Q1.  Approximately 23% of the companies in the S&P 500 reached 52-week highs.6  And if you gave each company in the S&P 500 an equal weight, the index rose 25% since October.6  (If you gave each company an equal weight in 2023, the index would have only gone up 12% for the year instead of 24%.7)  In other words, more companies are driving the markets rather than just a few.  And that’s good! 

But there are equally compelling arguments for why the market’s performance may not be sustainable.  For example:

Inflation ticked up in Q1 and the Fed has said they’re in no hurry to cut rates.  Consumer prices increased by 0.4% in February after rising 0.3% in January.8  This was largely due to seasonal factors – prices usually go up in winter, partially because fuel tends to be more expensive – but it means the Fed must be even more cautious about lowering interest rates prematurely.  If investors stop expecting rate cuts soon, the markets may well pull back. 

Stocks may be overvalued.  When you divide the size of the U.S. stock market against the size of the economy, you can see how fast the stock market is growing compared to GDP.  If the ratio is heavily skewed in favor of the stock market, it suggests stocks are overvalued relative to how much the economy is producing.  Right now, that ratio is near a two-year high.6 

The hype around AI may be overblown.  Recent technological advances have investors salivating at the possibility that AI will help companies produce more at lower cost…and by doing so, return more value to their shareholders.  But this hype has been going on for well over a year now.  How much AI has contributed in terms of tangible results is an open question.  Developing AI technology is extremely expensive, so if investors decide the return is not worth the expense, the hype may die out. 

So, like with a March Madness bracket, how do we decide what to predict?  Which argument, which statistics, matter? 

The answer: All of them…and none of them. 

Here at Minich MacGregor Wealth Management, we pay attention to all these statistics but are beholden to none.  We use statistics to be alert to any possible opportunities and to be wary of any potential pitfalls.  In other words, we use statistics to help us be prepared for possibilities…not to make predictions. 

You see, what really matters is that we don’t treat investing like March Madness. 

When you fill out a bracket, you are then locked into whatever choices you made.  If you make a wrong choice, you must live with it. It’s too late to change anything.  But our strategy is far more flexible.  Imagine you filled out a bracket but could then adjust in real time depending on how different games were trending.  Furthermore, imagine you could exit out of your bracket altogether, if necessary, and then start participating again later. 

That’s what we can do every day with the markets.  Furthermore, we’re able to focus on the metrics that are proven to matter: Primarily, the law of supply and demand.  As a result, we don’t have to make predictions, hope we’re right, and then hold on no matter what.  We measure how various stocks and sectors – or teams and regions, in March Madness parlance – are trending.  When they trend above a certain point, we play offense with your portfolio.  When they trend below, we play defense.  Experience has convinced us that this approach – being flexible and adaptable – is the surest way to your destination. 

As always, though, let us know if you have any questions or concerns.  While we’re hardly qualified to give bracket advice, our team is always here to help you with a different sort of Big Dance: The one that takes place where you want it, when you want it, with the people you want to share it with.  

1 “Stocks close out 2023 with a 24% gain,” CBS, www.cbsnews.com/news/stock-market-up-24-percent-2023-rally/
2 “The SP 500 just turned in its best first quarter since 2019,” CNN Business, www.cnn.com/2024/03/28/investing/premarket-stocks-trading-first-quarter/index.html
3 “12-month percentage change, CPI,” U.S. Bureau of Labor Statistics, www.bls.gov/charts/consumer-price-index/consumer-price-index-by-category-line-chart.htm
4 “The Employment Situation – February 2024,” U.S. Bureau of Labor Statistics, www.bls.gov/news.release/pdf/empsit.pdf
5 “GDPNow,” Federal Reserve Bank of Atlanta, www.atlantafed.org/cqer/research/gdpnow
6 “Warren Buffett’s favorite market indicator is flashing red,” CNN Business, www.cnn.com/2024/03/27/investing/premarket-stocks-trading/index.html
7 “S&P 500 Equal Weight Index” https://www.spglobal.com/spdji/en/indices/equity/sp-500-equal-weight-index/#overview
8 “Consumer Price Index – February 2024,” U.S. Bureau of Labor Statistics, www.bls.gov/news.release/cpi.nr0.htm

Pre-Retirement Spring Cleaning Checklist

Written by Minich MacGregor Wealth Management on . Posted in Uncategorized.

Spring is in the air, and that means it’s time for spring cleaning.  But wait!  Before you pick up that dustpan, give a thought to your financial spring cleaning first. 

What do finances and spring cleaning have to do with each other?  If you’re preparing for retirement, the answer is “A lot!” 

These days, the term spring cleaning is often used as a metaphor for getting your affairs in order.  As you can imagine, getting your retirement affairs in order is critical if you intend to actually retire when and how you want.  There are many things to keep track of, many tasks that need doing, and many decisions to make. 

So, how do you begin?  Well, when many people do their actual spring cleaning, they make a checklist.  What supplies they’ll need, what rooms to organize, what needs to be mopped, vacuumed, dusted…it’s the most efficient way to clean.  We suggest doing the same for your finances.  So, without further ado, here is a sample Spring Cleaning Checklist to help you better prepare for retirement. 

Pre-Retirement Spring Cleaning Checklist

  • Contribute the maximum amount to your IRA if you have one.  Remember, an IRA is a valuable way to save for retirement in a simple, tax-advantaged way.  For 2024, the annual IRA contribution limit is $7,000 up to age 49, and $8,000 for those 50 and older.1 
  • Review your 401(k) and increase your contributions if necessary.  How has your 401(k) been performing?  Do you understand how your money is being invested and why?  Are you contributing enough to take advantage of any employer matching?
  • Start looking at your existing expenses.  Which are likely to continue after retirement?  What expenses can you remove right now?  This is a good way to find extra ways to save for retirement, and it will make your life a lot simpler once retirement comes. 
  • Make sure you know where all your estate planning documents are.  You should have a copy of your will, power of attorney, advance medical directives, letter of instructions, and other documents in a secure but easily accessible place.  Make sure your spouse (or other loved ones) knows where these documents are kept. 
  • Review your current insurance policies.  Are there any potential gaps you see?  (For example, Critical Illness and Long-Term Care insurance are two types of policies many people don’t have but are often extremely valuable for retirees.)  

But most of all …

  • Make a list of your top retirement concerns.  Is there anything you are confused or nervous about?  If so, start getting the answers you need now instead of waiting till you’re already retired.  Remember, you want to enjoy your golden years, not stress over them. 
  • Similarly, make a list of any new goals or dreams you have for retirement.  What will it take to achieve or afford them?  Are you on track?  If you’re not sure, it’s time to start planning. 

Spring cleaning is never the most fun thing in the world, but it’s often one of the most beneficial.  Just as you probably enjoy living in a clean, organized home, you’ll enjoy the peace of mind that comes with getting your finances in order.  Trust us: if there’s one thing we’ve learned in all our years of helping people plan for retirement, it’s that a little organization today can make for a much happier retirement tomorrow. 

Of course, if you need help with any of the items on this checklist, please let us know.  For example, if you aren’t sure how your 401(k) is doing, we’d be happy to help you analyze it.  If there’s a valuable estate planning document you don’t have, we can point you in the right direction.  And if you have any questions or concerns about retirement, the chances are good that we have the answers. 

In the meantime, we wish you a happy spring—and a happy spring cleaning! 

1 “401(k) limit increases to $23,000 for 2024, IRA limit rises to $7,000” Internal Revenue Service, accessed November 9, 2023.  https://www.irs.gov/newsroom/401k-limit-increases-to-23000-for-2024-ira-limit-rises-to-7000