The Confident Chronicles: December 2, 2024
Cool Charts Explained: Market Returns:
I hope you had a Happy Thanksgiving! I am not sure about you, but I ate way too much food, drank some good wine, and had a great time with my parents visiting me and my daughter for the week.
November was a great month for the stock and bond markets. We have the election(s) behind us without any uncertainty. This is good for the markets. They don’t care which party gets elected; they just need clarity.
Uncertainty is the worst thing for the financial markets, so this election was really good for the markets (because there is no uncertainty, legal challenges, etc).
So, now we get ready to see what type of “Santa Rally” we will see in December.
As has been the theme all year, the “Style Box” charts above have been changing every month. There have not been any market leaders this year as the markets have been very chaotic.
When I look at the chart above for November, one thing is clear, risk is “back on” in the markets.
You can easily tell this as every “growth” category was a big winner AND every “small” category. This shows that investors are willing to take more risk with their money.
This is most likely due to the elections being behind us without any major recounts, court challenges, etc. I think the collective markets were preparing for a long and drawn-out election cycle and we got the opposite.
So, money has gone back into the “risk on” assets (like “growth” and “small caps”).
We have also seen a rotation in the types of stocks that have become market leaders. For the past few years, the tech heavy NASDAQ has led the markets. We are starting to see a broader rally in the S&P 500 versus the NASDAQ. This could just be profit taking or this could be investors taking a new strategy heading into the new year.
Time will tell!
Cool Charts Explained: S&P 500 Chart:
The above S&P 500 chart tells me that there was not much “panic” nor much “elation” in the month of November.
It appears that market momentum just “paused” in the month of November. The MACD (Momentum Average Convergence Divergence), which is the bottom portion of the chart, shows the momentum was up, down, flat and slightly up for the month.
But the MACD also shows there was very little “volume” (amount of trading) after the 15th of the month.
This means the market can easily move in either direction. This is normal for the end of the month as many traders take the week of Thanksgiving off.
So, we should see the volume return mid-week as the traders get back to work.
At least back to work until Christmas, when they will take time off again!
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:
· Commodities Broad Basket
· Diversified Emerging Markets
· High Yield Bond
“Future Contributions” are an optional feature in Plan Confidence, and you may or may not receive this 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 and label it as a “proxy”.
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 and are fully invested.
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 log in 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 an upward trend for the past week, which has brought the monthly numbers up.
This is pretty common during an election cycle after we get the results.
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 don’t have any uncertainty about “who” got elected and what the house and Senate will look like next January.
So, hopefully, the market momentum will continue through the rest of the year.
We usually get a “Santa Rally” heading into the end of the year as there is increased spending due to Christmas.
So, as the cold air permeates the United States, let’s hope for an extended rally and a large bump from Santa.
As always, I appreciate you using the Plan Confidence platform for your professional, ongoing advice.
Stay confident my friends and make it a great December!
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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