Let’s kick it off with some Bon Jovi, “we’re halfway there,” I know you can hear it!
I hope that you and your family had a fun and refreshing 4th of July 🇺🇸
I always love the midyear report because it’s a good reminder of how far we’ve come:
- The S&P 500® closed 2024 at 5,881.63. As of this note, the S&P 500® is 6,282[+6% YTD]
- Since January 1st of 2023 [+62%]
- Over the past 10 years, [+254%]
As I usually do in these reports, I ask that we first remember a handful of timeless truths about enduringly successful personal wealth management. Then, we’ll proceed to some more current observations.
CORE BELIEFS
We are goal-focused, plan-driven, long-term equity investors. Your ‘Know My Plan’ portfolios are derived from, and driven by, your most cherished lifetime financial goals, not based on economic temperature or market timing.
We do not believe the economy can be consistently forecast, nor the markets consistently timed. We do not believe it is possible to gain any advantage by going in and out of the markets, regardless of current conditions.
We believe that the most efficient method of capturing the full premium compound return of equities is by remaining fully invested all the time.
We are prepared to ride out the equity market’s frequent, often significant, but historically always temporary declines. We believe that even during such trying episodes, our reinvested dividends will be buying more lower-priced shares – and that the power of equity compounding will be continuing, toward our long-term benefit.
CURRENT OBSERVATIONS
The first six months of 2025 can likewise be summed up with two clear takeaways
- The U.S. economy continues to show resilience, avoiding recession and growing modestly.
(2) The equity market, fueled by strong corporate earnings and expanding dividends, pushed to even higher ground.
A few things we’re seeing and believe:
Economic conditions remain stable. While GDP growth hasn’t been rapid, it has been steady—and steady is good. Job growth remains positive, and the unemployment rate has held near historic lows. Inflation is gradually easing, though not yet at the Federal Reserve’s 2% target.
The Fed has maintained a cautiously restrictive stance. Interest rates remain elevated, but with inflation no longer the dominant concern, discussion has shifted subtly toward when, not if, policy easing will begin. Still, the Fed remains committed to ensuring inflation does not reaccelerate.
Despite tight monetary conditions, equity markets have performed strongly. With earnings momentum carrying over from 2024 and upside surprises in several sectors, major indexes have notched new highs.
Even with record dividend payouts, S&P 500® companies still retain room to increase distributions. The payout ratio remains below long-term averages, and with earnings growth accelerating, the outlook for dividend growth into year-end and beyond remains strong.
Earnings and dividends are the variables that ultimately drive the long-term value of our core investment asset: ownership equity in a broadly diversified portfolio of enduringly successful companies. Not the national debt; not the presence or absence of Fed rate cuts; not war(s); not the onset of the next “crisis.”
Looking Ahead
We continue to believe that the more we focus on the fundamental strengths of ongoing financial planning, the more we’re able to tune out the noise, and the less danger we will be in of emotional overreaction to gyrations in “the stock market.”
More than anything, we want to express how much we love working with our clients. It’s a privilege to walk alongside you, helping clarify your goals, grow your wealth, and make confident financial decisions. Your trust means everything to us. We’re energized by what’s ahead and deeply excited for the opportunities the future holds. Thank you for including us in your journey, we can’t wait to see what the next chapter brings.
If you or someone you’re close to is a high-achieving professional that could use help aligning their finances and establishing a financial plan, please reach out to us, we’re accepting new clients and eager to help.
–Nic
This material is for informational purposes only and is not intended as investment advice or a recommendation to buy or sell any specific security.
All investing involves risk, including the possible loss of principal. Past performance is no guarantee of future results.
The S&P 500® is an unmanaged index and cannot be invested in directly. Index performance does not reflect the deduction of any fees or expenses. Any opinions expressed are those of the author and are subject to change without notice. If we’re not working together, please consult with your financial advisor before making any investment decisions.
