Milestone Fall Market Update

November 15, 2023

At Milestone, we embrace this season of transformation with open arms and a warm heart, and we wish to extend this feeling of warmth and gratitude to you.

Autumn is a time of reflection, of harvest, and of giving thanks. It is in this spirit that we reflect on the trust you have placed in us and the goals we have achieved together. Your financial well-being is the core of our mission, and we remain steadfast in our commitment to guide you towards a prosperous future. With that, we wanted to share some updates on the markets and what we’ve been up to!

Market Update

As you are likely aware, the Federal Reserve Bank in U.S. has been raising interest rates for a while now – 20 months to be exact. This has led to rates increasing on loans, savings/money market accounts, and bonds. The rise in interest rates is due to inflation spiking last year and the desire of the Fed to cool the economy down to reduce the increase in prices. Last summer, inflation peaked at 9.1% and has now come back down to 3.7%. While prices in most areas have not declined and aren’t expected to, the rate of change isn’t increasing as much, which is good news. The Fed’s target rate of inflation is 2% and most economists think we will get to that level next year. Given the progress, many investors expect that the Fed is now done raising interest rates. If not now, some expect they may raise rates one more time. Nevertheless, whether they are done now or done in a few months, historically markets have performed well in the year after the Fed is done raising rates, with stock and bond markets averaging 20% and 14% respectively. The chart below shows performance of the stock and bond markets 12 months after we reach peak interest rates.

While the stock market as measured by the S&P 500 has performed well this year, up over 15%, almost all the gain in the major index can be attributed to a handful of stocks (big tech companies that were down big last year, Amazon, Tesla, Nvidia, etc.). Removing the top performers results in a market gain of only 4%, and many of the outperformers are still negative after last year’s significant decline.

 

Many areas of the market have not recovered. Small company stocks as measured by the Russell 2000 are down 4.45% and medium sized companies as measured by the Russell Mid Cap index are down 1.28% through October. It appears we are still in the early stages of the market recovery, which often represents the highest level of frustration, but can be the best time to invest.

 

The bond market has continued to struggle with increasing interest rates. Interest rates that were once 1-2% are now 5-7%, which is good for investors going forward, but rising rates cause bond prices to decline. The opposite will be true if we do in fact see rates decline next year.

It is a good time to make sure your investments are aligned with your financial goals. If you’ve moved money out of the markets given the volatility over the last few years, it makes sense to revisit that and make sure you are invested appropriately. Please give us a call if you’d like to review your investments outside of your normal review schedule.

Milestone News

Sam, Jeff, Dave and Justin (pictured from left to right) attended Commonwealth Financial's National Conference in October! The conference was five days of advanced courses focusing on financial planning, investment management, and Social Security/Medicare planning. They also got to spend time with other peer financial firms across the country to discuss best practices.


In other news, we are thrilled to report that Sam Feiser passed his CFP Board Exam! Congratulations, Sam!

We’d like to introduce you to new members of our associate advisor team!

As we grow, it’s important that we continue to add advisory support to better serve you. Over the coming months and years, we are excited for you to meet and work with them!

Jeffrey Hegedus

Jeffrey started with us last summer after beginning his career at Vanguard. Prior to that, Jeff worked for 10 years as a power plant operator where his life changed after his father was diagnosed with cancer. While he enjoyed working at the power plant, he realized life is short and he would be better suited doing something he loved. He started going to school for finance at DeSales while working full-time. Jeff developed a passion for financial planning and is meticulous in his approach.

Mihir Saudagar, AIF®

We met Mihir through a normal interview process and were immediately impressed by his knowledge and maturity. Mihir has a master’s degree in Corporate Finance from Penn State and previously worked as a Project Manager in Asset Management for a large financial planning firm. He was named Senior Analyst of the Year while attending Millersville University and is currently working towards his CFP designation.

Justin Poccia (“JT”)

JT graduated from DeSales with a finance degree and started with us this summer. Prior to joining Milestone, he interned for Morgan Stanley working on client communication. JT is easy to talk to, funny, enthusiastic, and has a black belt in karate.