Your Money This Week

New Market High

Last Friday the S&P 500 hit a new all-time high, closing at 4,839.81 and passing the previous high water mark of 4,818.62 set on January 4, 2022.

For those of you keeping track at home, the last bull market peaked January 4, 2022. The bear market born that day ended on October 12, 2022. The new bull market that started in October, 2022 led to the all-time high we saw last week.

Global stocks have followed a similar pattern, although as of now they are still 3% below their all-time high.

Investing at Market Highs

This has prompted some questions, mostly along the lines of whether now is too late to get in given how strong the market has been lately.

If you’re not convinced that being a buy and hold investor and having the right asset allocation to ride out the dips and stay the course is the best approach, I don’t know that I have it in me today to craft a clever paragraph that can get you there. What I will share is some history that colors my perspective on this question with the hope it helps.

1. Bull markets last a long time: the average bull market since 1947 has lasted 1,735 (Median 1,512). This one is 464 days old.
2. Bull markets have generated powerful returns: the average bull market return since 1947 is 156% (Median 101%). We’re up 33% so far in this one. Source for both of these here.
3. As you can see from the chart below, the market spends more than half its time within 10% of its all-time high.

Diversify Though

That being said, while U.S. large cap stocks will be core portfolio holdings, there are cheaper market segments and regions that should be incorporated into your investment portfolio.

I shared some details here. And our firm just did a great 2024 outlook webinar which you can listen to here.

Inflation

Today’s inflation report seems to be a non-market event, which is good . This piece provides a nice overview. Here’s the key conclusion for readers and market watchers:

The release adds to evidence that inflation, while still elevated, is continuing to make progress lower, possibly giving the Fed a green light to start cutting interest rates later this year.

Fed’s favorite inflation gauge rose 0.2% in December and was up 2.9% from a year ago by CNBC

Congrats! You’re 50

Our team shared this planning reminder with clients earlier today.

Individuals who are age 50 or older by the end of the year may be able to make catch-up contributions to employer sponsored retirement plans and IRAs. These additional contributions can help build savings for the future and provide income tax benefits.

For most employees, the contribution limit to 401(k), 403(b) and 457 plans is $23,000 from salary-deferral in 2024. The catch-up provision allows another $7,500 for those 50 or older, for a total contribution of $30,500.

Even if you have previously elected the maximum allowable contribution with your employer, you may wish to verify how being age 50 or over impacts your payroll withholdings. You may need to take proactive measures to ensure you enjoy the benefits of the catch-up amount this year. 

The IRA and Roth IRA contribution limit for 2024 is $7,000; with an additional catch-up contribution limit of $1,000 for those age 50 or older. Eligibility for deductible IRA and Roth IRA contributions are dependent on adjusted gross income (AGI), with participation phased out for many households.