IRA to ROTH IRA Conversions
Each year, we recommend that our clients consider converting money from an IRA to a Roth IRA. Because of our national debt, we believe that taxes will need to be raised in the future, and tax brackets will correspondingly be worse. If you are in the 12% tax bracket, we especially recommend that you consider converting whatever you can afford. Please give us a call if you have any questions or if you’d like help putting a tax plan together.
Grateful for November, but Will the Santa Clause Rally Deliver?
From the recent S&P 500 peak on July 24th, the S&P 500 dropped for three months in a row and lost over 10% before November, but thankfully, the market came back as we predicted in our previous post. Please check out your own individual statements to see the performance, and let us know if you have any questions.
While past performance cannot predict future performance, it does not typically pay to fear December. The market went up fast in November, so it may go sideways or drop a bit to digest the gains, but overall, we’re still cautiously optimistic December will be a positive month when the dust settles. Historically, over the past 30 years, the market has been positive 75% of the time in December, with an average gain of 1%.
Why the Next 11 Months Hold Promise
In the long term, there are four pieces of evidence that are currently making us optimistic that the next 11 months until the election have the potential to be good for stocks overall despite some potential short-term bumps in the road.
- First, every President wants to get re-elected, so they make moves that potentially “window dress” the economy and stock market before the election.
- Second, in late April, one of our most important longer-term indicators shifted from negative to positive. It had been negative since the first quarter of 2022, so it was negative for quite a while (Source: https://www.shermanportfolios.com/indicators).
- Third, our other three indicators, including both short-term and intermediate-term, have turned positive, so all four of our preferred indicators are currently positive. While past performance cannot predict future performance, in the past, this type of indicator switch has said brighter days may lie ahead for the stock market in the longer term.
- Finally, the 200-day moving average of the S&P 500 has turned and has been heading up rather than down. This is a longer-term trendline, and in the past, it has had some success identifying a change in trend.
We had a different indicator a few months back state there is a chance we’ll have a recession within the next year (inverted Yield Curve, Source: https://www.forbes.com/sites/simonmoore/2024/02/06/the-inverted-yield-curve-continues-to-flash-a-recession-warning/?sh=1325948b15ac). We’re hoping that recent improvements in the overall economy, inflation data, and the housing market will provide some stability moving forward.
Financial Planning and Review Meeting
We’d love to have a review meeting with you to discuss investments, retirement income planning, college planning for kids or grandkids, tax preparation, health insurance, including Medicare supplemental and prescription drug plans, and a variety of other financial planning topics. Please get in touch with our office at (586) 226-2100 to schedule a meeting today! If you’ve had any changes to your income, job status, marriage status, a new birth in the family, 401K options, address, risk tolerance, or any other financial changes, please contact us right away.
Sincerely,
with contributions from Robert Wink, James Wink, Zachary Bachner, and James Baldwin
Notes & Disclaimer: Stock market indices, like the S&P 500 Index, are unmanaged groups of securities considered to be representative of the stock market in general or subsets of the market, and their performance is not reflective of the performance of any specific investment. Investments cannot be made directly into an index. Historical returns data are calculated using data provided by sources deemed to be reliable, but no representation or warranty, expressed or implied, is made as to their accuracy, completeness, or correctness. This information is provided “AS IS” without any warranty of any kind. All historical returns data should be considered hypothetical. Past performance is no guarantee of future results.
This communication is only intended for recipients who reside in states where our agents are licensed to sell these products. Investment advisory services are offered through Summit Financial Consulting, LLC, an SEC registered investment advisor. Registration does not imply a certain level of skill or training. Summit Financial Consulting Investment Advisor Representatives do not render tax, legal, or accounting advice. Insurance products and services are offered through Summit Financial Consulting, LLC. Note: Please update Summit Financial Consulting, LLC, if your investment objectives have changed or if the personal or financial information previously provided has changed. The investment advisory disclosure document that describes Summit Financial Consulting investment advisory services account is provided to you annually. Please consult Summit Financial Consulting for a copy of this document should you need an additional copy. All guarantees are subject to the claims paying ability of the issuing insurance company. Past performance cannot predict future performance. It is not possible to invest directly in an index. The Sherman Group, LLC is not associated with Summit Financial Consulting, LLC in any way, other than a research sharing partnership. Back testing is more heavily scrutinized than any other type of investment analysis because it can be updated to take advantage of past data. The algorithms and trading signals that we receive from the Sherman Group, LLC were created using back testing with the goal of creating a sustainable research process. We have reviewed data from the entire 20 year period which was mostly back tested, and have also personally reviewed the live data for the past 5 years and feel comfortable with it, but we encourage you to meet with us and ask questions so you are fully informed on what we plan to do with your investment assets at Charles Schwab. It is important to look at fees, taxable repercussions, and trading frequency when looking at a rate of return number. There is no perfect system or research feed, and Sherman Group, LLC has had both longer term and short-term periods where they lost money. Investing involves risk, and these portfolios are no exception.