Q1 2024 Client Letter
April 3, 2024
Dear Valued Client:
Enclosed are your reports and spreadsheets (Clients with assets over $750,000) for the period ending March 31, 2024. There are also educational materials enclosed with this package.
Market Recap and Outlook
The 2023 year-end rally continued into the first quarter of 2024 with most market indexes up by mid-single digits. We have been stating that market movements would be data-dependent, and the data has been good. There has been stable economic growth, falling inflation, and impending Fed rate cuts. The enthusiasm over Artificial Intelligence (AI) has also been a catalyst in the tech sector. The S&P500 went over 5,000 for the very first time ever this quarter.
The start of the year has also seen a more “evenly distributed” rally. Last year, the tech sector led the way and this year the gains have been spread across many sectors. In fact, 10 of the 11 market sectors were positive in the first quarter of 2024. The only negative sector in the first quarter was real estate, which was weighed down by concerns in the commercial real estate market. International markets and commodities were also positive. Bonds in both the taxable and tax-free market did not do much (about even), but bonds should be used mostly for income.
As we look forward to the rest of the year, we have several things to be concerned about. The first issue is valuation. The forward earnings yield of the S&P500 is under 5%, which is a little bit of a stretch in our view. We do not view the equity market as in a “bubble”; however, we do think it is slightly over-valued in the short run. A market decline of around 10% would represent a “buying opportunity” in our view.
We are concerned over the timing of rate cuts by the Federal Reserve. The Fed has stated that there will probably be three rate cuts, but they may not have the same time frame as what the market believes. If inflation data is bad, the timing of those rate cuts can be delayed and that would hurt equity prices.
We believe market sentiment is a little bit “too positive” and complacent. The future is always an unknown and we believe that the market may be a little ahead of itself.
Having said that, we believe no action should be taken by our clients at this time. Stocks should not be sold, and clients should contact our office when investing large lump sums.
We believe the scenario of lower inflation and fed rate cuts will play itself out. It just may take longer than the market expects. We are keenly aware of the fact that there is a Presidential election happening in November and will speak to that as the date gets closer. We have enclosed a piece on market performance based on political parties that you may find interesting.
Bottom line? The recent rally IS supported by solid fundamentals. There are reasons to be positive, but we may be just a little bit ahead of ourselves.
Clients should contact our office with any questions or comments.
Wealth Management Issues
The four items we focus on in our practice are Investments, Income Taxes, Insurance, and Estate Planning.
When it comes to investing, we make every attempt to have your investments married to your quantified goals. To achieve that goal, it helps to have an updated Cash Flow Statement (CFS) in your file. If you feel this needs an update, please contact our office.
Your income taxes are being completed by our office. NOW is the time to tax plan for 2024. Again, please contact our office to ensure you are paying the least amount of tax in a way that is consistent with your goals and objectives. We are happy to meet with you on this. Also, contact our office PRIOR to making a major financial decision.
On the insurance front, please check with our office to see if your life, disability, and long-term care insurance needs are being met. We offer these products when appropriate for your situation.
On the estate planning front, clients with estates larger than $5 million need to make sure your documents are in place for the possible change in the law that takes place at the end of next year. Remember the value of life insurance policies and real estate could count when you determine your taxable estate.
We are here to help you with all areas of Wealth Management and are here to help you stay on track towards achieving/maintaining your goals and objectives.
Office Updates
We are very proud of our new team members who are hitting the ground very quickly. Mike Rytelewski has already passed the Certified Financial Planner (CFP) and Series 7 securities exam in less than one year. He is now going after the Certified Public Accountant (CPA) exam. Emma Poalillo has passed the Series 7 exam and is now going after the CFP.
Anthony Sandomierski CPA, CFP, MS (Taxation) and his wife Genna are now expecting their second child this September.
Jack, Anthony, and Jason Gordon CPA, CFP, MS (Taxation) will be attending the Avantax Elite Advisor Summit in the Bahamas from May 19th – May 23rd.
Our office continues to experience explosive growth and we appreciate the great people you refer to our office. YES, WE ARE TAKING ON NEW WEALTH MANAGEMENT CLIENTS!!!!
Please contact our office if you would like an update meeting and THANK YOU for your business.
Sincerely,
Jack Oujo, CPA/PFS, CFP®, CSA, MS (Taxation)
Oujo Wealth Strategies
1540 Highway 138, Suite 106, Wall, NJ 07719
732-556-4211 – Direct Dial
908-675-5571 – Cell
732-681-4479 – Fax
www.OujoWealthStrategies.com
Disclosures
- Investment Recommendation Disclosure: The client acknowledges that the representative is relying upon the client information (e.g. risk tolerance, time horizon, and investment objective) for the purposes of providing recommendations to the client. The client agrees to give the representative notice of any significant changes in the client information and to provide the representative with any additional information that the advisor may reasonably request.
- Historical Performance Disclosure: Past performance is not indicative of future results. The investment return and principal value will fluctuate with the market. Investor’s shares when redeemed may be more or less than their original cost.
- General Market/Investment Risk Disclosure: Investments are subject to market risks including the potential loss of principal invested. Yields and prices will fluctuate along with the market and other economic conditions. Securities may be worth less than the original cost when redeemed.
- Information Disclosure: The information contained herein has been obtained from sources considered to be reliable, but Avantax does not guarantee the accuracy or completeness of any statement.
- A portion of municipal bond’s income may be subject to state or local taxes. A portion of a municipal bond’s income may be subject to the federal alternative minimum tax. Investing in municipal securities can be volatile and include such risks as: adverse tax or court rulings, legislative or political changes, market and economic conditions, issuer, industry-specific (including the credit quality of municipal insurers), and other conditions.
- The Avantax affiliated companies exclusively provide financial products and services, and do not provide or supervise tax or accounting services. Advisors may provide tax, accounting or other services through their independent outside businesses, but these services are separate and apart from Avantax.
- Standard & Poor’s is a corporation that rates stocks and corporate and municipal bonds according to risk profiles. The S&P 500 is an index of 500 major, large-cap U.S. corporations. You cannot invest directly in an index.
- The attached articles were created by third parties. They were not written or created by Oujo Wealth Strategies and do not represent the views and opinions of Avantax Wealth Management® or its subsidiaries.
(*) Performance and Data numbers are per Morningstar and the Sevens Report. Client spreadsheets are normally sent four times per year to clients with over $750,000 of investment assets and twice per year for clients at the $500,000 to $749,999 level.
** Represents brokerage, direct to fund and annuity assets under management as of 12/31/2023.
