The Confident Chronicles: November 1, 2024
The Confident Chronicles: November 1, 2024
Cool Charts Explained: Market Returns:
I hope you had a Happy Halloween!
I am not sure how I had any candy left for the trick o treaters as I have been eating all the Kit Kats and Peanut Butter Cups I bought over the weekend for them.
Fortunately, all the candy is gone, so I will slow down my candy habit.
Speaking of slowdowns, the markets have dramatically slowed down in the month of October. (The above returns don’t reflect the beating the market took on 10/31/2024).
If it did, then all the monthly returns would all be negative!
The above chart is very confusing to me.
Usually when we see a market slowdown, like we have with the S&P 500 the past month, we see a corresponding “shift to safety”. We usually see money shift from the “small” caps to “large” caps and a shift from “growth” to “value”.
This is not what we see above. The above chart shows the small category outperformed the Value and Core categories. And the Large Growth category outperformed all of them.
This is not a market that has direction!
It could be due to the election next week or it could be because the economy is not as solid as the headlines suggest.
The economy could be just like the chart above, some parts are doing really well and some parts are starting to slow down.
This reminds me of an old adage, “If you have one foot in scalding hot water and one foot in ice cold water, then ‘on average’ you are comfortable”.
So, “on average” the markets are ok.
Just know that we are keeping a fine eye on where you should be investing.
Cool Charts Explained: S&P 500 Chart:
The above S&P 500 chart is what we use to check our “technical” indicators for our Tactical Models.
This chart coincides with what I have been writing above about the markets starting to turn south. When I look at this chart, two things stick out.
1) The price of the S&P 500 is about to cross below the 50 Day Moving Average. If the S&P stays below the 50 Day Average for more than a few days, then we usually see a steep sell off.
2) The Moving Average Convergence/Divergence (MACD) has gone negative. The MACD is what is used to monitor the momentum of the market. When I look at the chart above, I can see the momentum turned negative on October 23rd (red line above the black line) and the overall direction of the MACD is down. This is not a good sign for the S&P.
If we use the S&P 500 as a proxy for the U.S. market, then “on average” the market is in trouble. However, as I wrote in the Market Barometer section, there are some segments of the market that are doing well and some that are not.
So, we need to be wary of what the “averages” are telling us.
PLAN CONFIDENCE MODEL UPDATES:
FUTURE CONTRIBUTIONS:
Future contributions are money that is added to your plan with every paycheck.
We monitor the future contributions monthly and are looking to direct these monies into investments that we hope to be “on sale”.
If we are correct, this will allow you to buy more shares in your portfolio.
This month we are advising that you use the following:
· Foreign Small/Mid Blend
· Global Bond
· Global Real Estate
This is an optional feature in Plan Confidence, and you may or may not receive Future Contribution advice. Please discuss this with your advisor if you have any questions.
The exact amounts you should allocate depend on the model that you are using.
These categories may or may not be available in your plan. If they are not available in your plan, we will recommend the closest available asset class.
You can find all substitutions on your “Proxy Page” within your dashboard.
Please log into your Participant Dashboard to see the exact allocations you should be using as of today.
CURRENT ALLOCATIONS - STRATEGIC MODELS:
Current Allocations are the monies currently in your plan.
Making changes to this money is commonly known as a “rebalance”.
Our “Strategic Models” combine the benefits of asset allocation and “buy and hold” strategies. These models rebalance quarterly back to their risk “targets” and remain fully invested through all market cycles.
Our Strategic Models rebalance the first trading day of every quarter.
Strategic Models last rebalanced on 10/1/2024!
The exact amounts you should allocate depend on the model that you are using.
The categories we use may or may not be available in your plan.
Please log into your Participant Dashboard to see the exact allocations you should be using as of today.
CURRENT ALLOCATIONS - TACTICAL MODELS:
Current Allocations are the monies currently in your plan.
Making changes to this money is known as a “rebalance”.
Some plans have trading restrictions on how often you can rebalance the money in your plan. Be sure to know your plan’s restrictions before implementing any tactical strategies.
Our “Tactical Models” combine the benefits of asset allocation and “momentum investing” strategies.
These models rebalance periodically back to their risk “targets” and the targets can be changed at any time given the current market conditions.
These models may go through periods of time while holding larger amounts of cash than the Strategic Models.
Our Tactical Models may rebalance on any given day.
Please be sure to look for an email from support@planconfidence.com letting you know when to make changes.
The tactical models have been updated today.
Be sure to login into your Participant Dashboard to check out the exact advice for your plan.
Below are the allocations for the new Tactical Models:
Our Tactical Models rebalanced today!
You should have received an email at 9am EST letting you know to login to your Participant Dashboard to review the new advice.
The exact amounts you should allocate depend on the model that you are using.
These categories may or may not be available in your plan.
Please log into your Participant Dashboard to see the exact allocations you should be using as of today.
KEVIN’S COMMENTARY:
The markets have shown a downward trend for the past week, which has brought the monthly numbers down.
This is pretty common during an election cycle.
I always say, the markets don’t care “who” gets elected. The markets don’t care what party holds the house or Senate.
The worst thing for the markets is uncertainty!
And right now, we have a lot of uncertainty about “who” will get elected and what the house and Senate will look like next January.
So, hopefully, we will get a clear picture on Tuesday.
If we don’t, that will continue the uncertainty and most likely will keep the downward pressure on the stock and bond markets.
So, lets hope for a decisive election with no ambiguity.
REMINDER: Don’t forget to turn your clocks back this weekend!
This update has been written by Kevin T Clark, RF™.
All opinions expressed are those of the author and not that of Plan Confidence Corporation nor any other firm or individual.
Kevin T Clark, RF™ is the CEO and Co-founder of Plan Confidence Corporation.
Kevin is an “ERISA Nerd” and one of only a hundred(ish) Dalbar certified Registered Fiduciaries (RF™) in the United States.
He has been helping hard working Americans invest their money since 1997!
Plan Confidence Corporation is an SEC registered “internet only” investment firm specializing in providing advice to hard-working Americans investing in their employer’s retirement plans (401k, 403b, TSP, etc).
They have created proprietary software so hard-working Americans can receive professional, ongoing advice on their employer’s retirement plan from an adviser of their choosing!
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