Market Commentary October 21, 2024

The Markets

Happy birthday!

The bull market in stocks charged past its two-year birthday on October 12. “This unique bull market is still young relative to history and, for now, supported by relatively healthy breadth and broadening participation,” wrote Liz Ann Sonders and Kevin Gordon of Schwab.

One factor in the U.S. stock market’s rise has been the American economy’s surprising strength as it recovers from a surge in inflation. Our economy is “the envy of the world” and “has left other rich countries in the dust,” reported Simon Rabinovitch and Henry Curr of The Economist. “Expect that to continue,” they wrote.

The strength of the U.S. economy was reflected in the release of robust economic data and solid company earnings reports last week. Here’s what happened:

S. retail sales grew faster-than-expected in September. Retail sales data show how much Americans spent at food and retail stores. The information is considered to be a leading economic indicator, which means that it provides some insight into what may be ahead for the stock market. Will Kenton of Investopedia explained:

“Retail sales is an important indicator that signals either the contraction or expansion of an economy. An increase in retail sales signals a healthy economy that is expanding while a decrease in retail sales signals the opposite. An increase in retail sales usually moves stocks upward and is good for shareholders.”

Third quarter earnings season was off to a good start. At the end of each quarter, publicly traded companies report on sales and profits for the previous quarter. Earnings season has a direct effect on share prices and stock market performance. “…if most companies, particularly the established market leaders, report increasing sales and earnings, traders tend to feel more confident about the market’s prospects. When earnings are trending below expectations, it can be a warning sign of potential trouble ahead,” explained Schwab.

At the end of last week, 14 percent of the companies in the Standard & Poor’s 500 Index had reported third-quarter performance. Seventy-nine percent had beaten analysts’ earnings (profit) expectations, and 64 percent had beaten revenue (income) expectations, according to John Butters of FactSet.

Major U.S. stock indexes moved higher for the sixth consecutive week, and U.S. Treasury yields finished last week in roughly the same place they ended the week before.

Data as of 10/18/24	1-Week	YTD	1-Year	3-Year	5-Year	10-Year
Standard & Poor’s 500 Index	0.9%	24.2%	37.8%	11.0%	16.3%	14.0%
Vanguard Total Intl Index (Foreign Stocks)	-0.4	11.8	25.1	2.5	7.0	5.7
Total Bond Market (U.S. Dollar Bonds)	0.0	3.1	11.9	-1.8	0.1	1.5
Gold (per ounce)	2.4	30.5	38.7	15.3	12.7	8.1
Bloomberg Commodity Index	-2.6	-0.4	-7.2	-1.8	4.5	-1.7

S&P 500, Vanguard Total International Stock Index, Vanguard Total Bond Market Index, Gold, and Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized. Sources: Yahoo! Finance; MarketWatch; morningstar.com; djindexes.com; London Bullion Market Association. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly.

AN OFTEN-OVERLOOKED RETIREMENT RISK. When planning for retirement, there is a risk that is sometimes overlooked—the possibility of cognitive decline. It’s not fun to think about, but a significant number of older Americans experience difficulty with memory, problem-solving, concentration and other important mental tasks. Fortunately, there are some strategies that can help protect you and your loved ones.

As people age, they may not be as sharp as they once were. After 65, learning new information can take longer. Retirees, occasionally, struggle to find the right word or misplace their glasses and keys. This is normal aging that “doesn’t affect recognition, intelligence or long-term memory,” according to the Cleveland Clinic.

In some cases, though, a person experiences a more significant decline in brain function. It may be caused by a health issue, such as a stroke, or a disorder, like Alzheimer’s. About 55 million Americans live with Alzheimer’s disease or another type of dementia.

The National Institute on Aging suggests that getting enough sleep, eating healthy meals, being physically active, managing any health conditions, connecting with family and friends, and keeping your brain engaged by learning new things can help keep your brain healthy.

No matter how conscientious you are, it’s also important to organize your finances so they are easy to manage. This often means:

Building a network of family members and professionals who understand your goals and needs.
Streamlining your finances so managing money is easier as you age. Automating bill payment, keeping track of accounts through a centralized system, and other actions can help simplify your financial life.
Putting appropriate planning documents in place, such as a will, a revocable living trust, a power of attorney, and/or a living will that spells out your preferences for medical care.

“Cognitive decline can have devastating consequences for personal finances and sound financial decision-making. The ability to manage finances is one of the first cognitive skills to deteriorate, leaving many people vulnerable to suboptimal financial decision-making and an ever-growing array of pernicious financial scams,” reported Chris Heye in Kiplinger Personal Finance.

If you would like to learn more, please get in touch.

Medicare Open Enrollment

For 2025, Medicare coverage open enrollment is from October 15, 2024 through December 7, 2024. Medicare Advantage open enrollment is January 1, 2025 through March 31, 2025. During the annual enrollment period (AEP), you can make changes to various aspects of your coverage:

Switch from Original Medicare to Medicare Advantage
Switch from Medicare Advantage to Original Medicare (plus a Part D plan and possibly a Medigap plan)
Switch from one Medicare Advantage plan to another or from one Medicare Part D (prescription drug) plan to another
Drop Part D coverage altogether
Enroll in a Part D plan – if you did not enroll in a Medicare Part D plan when you were first eligible. A late enrollment penalty may apply.

If you wish to enroll in a Medicare Advantage (Part C) plan, you must meet some basic criteria:

You must be enrolled in Original Medicare (Medicare Part A and Part B).
You must live in the service area of a Medicare Advantage insurance provider that is accepting new users during your application period.
You do not have End Stage Renal Disease (ESRD).

There are also some changes coming to Medicare in 2025. As a result of the Inflation Reduction Act that was passed in 2022, there are a few noteworthy changes being implemented beginning January 1, 2025, including:

There will be a $2,000 annual cap on prescription drug costs in Medicare Part D. This change affects only those with Part D plans and does not apply to out-of-pocket spending on Medicare Part B drugs. The $2,000 cap will be indexed to the growth in per capita Part D costs, allowing it to possibly rise each year after 2025.
Each Medicare prescription drug plan, including Advantage plans with drug prescription programs, must now offer all patients the option to pay the out-of-pocket prescription costs in monthly installments. While there is a monthly limit on spending, this is meant to allow patients to spread out high costs through a year. Monthly payment plans are not automatically applied, patients must enroll themselves.
Medicare Advantage policyholders will now receive a midyear notification of unused supplemental benefits in July. This personalized notification will hold a list of all supplemental benefits the policy owner has not used, the scope and out-of-pocket cost for claiming each one, and instructions on how to access said benefits. There will also be a customer service number to call for more information with the goal of allowing policy owners to more easily access the additional supplemental benefits that come along with Medicare Advantage. If you need help navigating your coverage options, please let us know, as we have partnered with several local professionals who may be able to assist you in selecting the plan that works best for you and your needs.

Best regards,

Waterford Advisors

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* These views are those of Carson Coaching, not the presenting Representative, the Representative’s Broker/Dealer, or Registered Investment Advisor, and should not be construed as investment advice.

* This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named firm or broker/dealer.

* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.

* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.

* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.

* All indexes referenced are unmanaged. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.

* Gold represents the 3:00 p.m. (London time) gold price as reported by the London Bullion Market Association and is expressed in U.S. Dollars per fine troy ounce. The source for gold data is Federal Reserve Bank of St. Louis (FRED), https://fred.stlouisfed.org/series/GOLDPMGBD228NLBM.

* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.

* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.

* The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system.

* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.

* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.

* The risk of loss in trading commodities and futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage is often obtainable in commodity trading and can work against you as well as for you. The use of leverage can lead to large losses as well as gains.

* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

* Past performance does not guarantee future results. Investing involves risk, including loss of principal.

* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.

* There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.

* Asset allocation does not ensure a profit or protect against a loss.

* Consult your financial professional before making any investment decision.

Sources:

https://www.schwab.com/learn/story/is-two-year-old-bull-market-2-legit-2-quit

https://www.economist.com/special-report/2024-10-19

https://www.census.gov/retail/sales.html

https://www.reuters.com/markets/us/us-retail-sales-increase-solidly-september-2024-10-17/

https://www.investopedia.com/terms/r/retail-sales.asp

https://www.schwab.com/learn/story/earnings-season-what-to-look#

https://advantage.factset.com/hubfs/Website/Resources%20Section/Research%20Desk/Earnings%20Insight/EarningsInsight_101824.pdf (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/10-21-24_Factset_Earnings%20Insight_7.pdf)

https://www.barrons.com/articles/stock-market-rise-moreanimal-spirits-e2735b04?refsec=the-trader&mod=topics_the-trader

https://www.barrons.com/market-data