July 2024
Stocks have been on a significant run, up 15-16% year-to-date despite slow economic growth, elevated inflation, high interest rates, geopolitical risks, and a challenging political environment. The S&P 500's rise has been driven mainly by a few large companies (e.g. Microsoft, Apple and NVIDIA), with the largest 10 companies representing 70% of the S&P 500’s returns. The S&P 500 equal weight index is only up 5%, indicating limited broad market growth. Current market concentration is similar to past periods like the late 90s dot-com bubble and the Nifty Fifty era, both of which preceded market downturns.
Despite high valuations, stocks are still essential for long-term growth in a diversified portfolio, having earned roughly 10% per year over the last century. However, history also shows that there have been several decade-long periods where stocks have had flat performance. The consistent theme of these decade-long periods was high starting stock valuations.
Bonds have faced challenges this quarter with continued volatility and low returns, while we have been able to veer from traditional bonds to generate solid returns. Private lending remains attractive, offering higher yields than traditional bonds with relatively lower risk, especially as banks retrench from lending. Meanwhile, real estate markets have been affected by high interest rates, with some cracks appearing. However, our real estate lending strategies have continued to perform well given the low loan-to-value ratios they exhibit.
Gold continues its strong performance, serving as an inflation hedge and alternate currency, countering traditional beliefs that high interest rates negatively impact gold.
Upcoming potential changes to the 2017 Tax Cuts and Jobs Act could significantly impact taxes and estate planning. Jeff and Meghan advise investors to focus on building resilient, diversified portfolios to navigate the uncertainty prevalent in the current political environment.
Last but certainly not least, Jeff and Meghan tease our upcoming Investor Symposium on October 17th at the Westlake Village Inn. Hear from Morton advisors, industry leaders, and experts as we dive into planning and investment opportunities. Some of the featured sessions taking place will be New Trends in Investing, Generating Passive Income, How Different Generations Think About Money, and Protecting Yourself from Fraud. Keep an eye out for more symposium details soon. It will be an event you won’t want to miss.
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Disclosures: Information and references to specific investments presented herein are for illustrative purposes only and subject to change without notice. It is not intended as investment advice and should not be construed as an offer or solicitation with respect to the purchase of any security. Investment opportunities described may only be available to eligible clients and involve a higher degree of risk. Each investment opportunity is unique, and it is not known whether the same or similar type of opportunity will be available. Morton makes no representations as to the actual composition or performance of any security. All investments involve risk, including the loss of principal. Past performance is no guarantee of future results. There is no guarantee that the investment objective will be achieved. Morton Wealth makes no representation that the strategies described are suitable or appropriate for any person, and should not be assumed that Morton will make investment recommendations in the future that are consistent with the views expressed herein. You should consult with your financial advisor to thoroughly review all information before implementing any transactions and/or strategies concerning your finances.
