As we close out the summer, the market is trying to find sound footing, but we expect it to remain jittery due to a few uncertainties:
For the year, large cap growth investments have continued to lead the way, while other sectors have experienced a cooling off. This correction aligns with our earlier hopes for a slight slowdown and is a positive development for long-term investors. The most recent pullback has allowed valuations to moderate, presenting potential buying opportunities in areas where we have strong long-term conviction.
With the Federal Reserve closely monitoring inflation, which has continued its downward trend, we are cautiously optimistic that the much talked about soft landing will come to fruition. The recent inflation report showed a further decrease, reaching its lowest annual rate in over three years. This is encouraging for both the economy and the markets.
On the political front, the country is gearing up for the upcoming election, with much anticipation for the Presidential Debate next week. It is clear that the months leading up to November will be filled with significant political discourse, which may feel uncomfortable, but has been the case every four years since our country was founded. As we have discussed in the past, the political changes in Washington have little effect on long-term portfolios.
"Labor Day was celebrated around the country this week and, as usual, when doing so there were speeches extolling the virtues of hard work and workers’ contributions to America, as well as assertions about why the living standards of American workers have risen so much in the past few generations."
"Interest rate expectations have changed wildly since the start of the year. While these expectations will continue to evolve as new data are released, one thing seems clear: the Federal Reserve will begin its rate cutting cycle this year, and it will cut by more in 2024 than it had previously telegraphed. As a result, investors are no longer asking the general question of 'does it make sense to own fixed income?'"
"Companies and consumers participate in a vast marketplace of goods and services. But some entity must watch over everything. That entity is the Federal Reserve System, the US central bank commonly known as the Fed. The Fed had found itself in the post-pandemic spotlight for its dramatic interest rate hikes to help control inflation and later for its caution in dialing them back. But it does a lot more than you may realize. What exactly is the Fed, and how does it work?"
"Many investors strategically make a Roth conversion a part of their overall retirement savings strategy. Roth conversions are, in essence, a way to pay income tax at today’s tax rates by converting pre-tax retirement assets in exchange for the potential of tax-free withdrawals in retirement. Roth IRAs offer several additional benefits, including no required minimum distributions."
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