From the desk of Anthony Sandomierski, CPA/PFS, CFP®, MS (Taxation)
Happy Halloween! I wanted to reach out and provide you all a quick update on where
markets are and where we see things. Feel free to contact Jason Gordon or myself with any
Stock Market Update
We’ve seen some movement in the market since our last update. The S&P 500 is currently
trading around the 4,100-4,200 range. It was in the 4,400-4,600 range a few months ago. It
started the year around 3,800 and previously peaked in 2021 around 4,800. So a modest
gain so far this year but some downward pressure over the past few weeks.
What’s causing this? It’s a few things.
Higher Rates – One is the market is pricing in higher interest rates for the long-term which puts
downward pressure on stocks. The easiest way to explain this is if I can put money in a fixed
investment for a high rate I need to compensated more for owning stocks. What happens if
rates go down? That would be quite favorable to stocks as they could get repriced upward.
What’s good news is the latest reports show that inflation is becoming less of an issue but
needs to get closer to the fed’s 2% target.
Earnings/Company Guidance – Like I have mentioned over and over in previous updates,
ultimately earnings drive the stock market higher. If companies are making more money, their
stock prices/value go up. This is what drives the market over the long-term. Earnings
announcements have been mixed but mostly positive. Expected earnings on the S&P 500
Index is still around $240/share for 2024. At 4,100 the Price to Earnings ratio is around 17
and the earnings yield around 5.8%. What does this mean? The valuation is starting to look
attractive at this price range. The market is reacting to unfavorable guidance that has been
given from the major companies of the S&P 500 Index. The performance of these companies
have been the major contributors to the growth of the overall market over the past 10 years or
Geopolitical Issues – The market reacts in the short term to political unrest. You are seeing
that with what is happening in Israel, Ukraine, China, etc. Should this be completely ignored?
No. But as it relates to the stock market you have to think about how companies will be
impacted and they are largely unaffected by these events. Earnings are the highest they have
ever been historically.
In our view, a good long-term entry point is around the 4,000 range. If it goes below this level,
we feel this is a good LONG-TERM entry point. Can the market go lower than this?
Absolutely. Markets are notorious for overreacting. It’s our job as advisors/investors to take
advantage of these opportunities.
We will be making tactical tax sensitive moves as we approach near end and if the market
declines further, we will take a small “bite at the apple”. Forward valuations on small and mid
cap equities are starting to look attractive and we may rebalance there.
If anyone feels like they need a review of their financial plan or want a general update of their
situation don’t hesitate to reach out to myself or Jason. We encourage clients to reach out
annually if you haven’t been in.
We are also accepting new wealth management clients and referrals are always greatly
appreciated. It’s how we’ve built our entire practice.
Anthony Sandomierski, CPA/PFS, CFP®, MS (Taxation)
Direct: (732) 681-1384