Client Newsletter Q4 2024
Dear Friends,
Happy 2025! As we’re well into the year, I want to first say I hope you all had a wonderful holiday season.
2024 was an incredible year for the markets, with the S&P 500 gaining an impressive 23%. Unlike the previous year, where the gains were driven primarily by the “Magnificent 7,” 2024 saw strength more broadly distributed across sectors. Many of you might assume that technology stocks like Apple, Nvidia, and Microsoft were the key drivers of the market’s success. Believe it or not, that wasn’t the case. The standout performers were Communications, Financials, and Consumer Discretionary—another strong reminder of the importance of diversification.
As many of you know, the end of the year typically brings the “Santa Claus Rally,” a period where the market tends to rise during the week of Christmas. Well, this year Santa decided to take a pass—perhaps he was working remotely—because the market finished down five days in a row heading into the year’s end. Despite this losing streak, the current economic trends are encouraging. The job market remains strong, inflation is easing, and corporate earnings—particularly in the banking sector—are holding up well. Of course, there are always concerns: Will there be a trade war? Are taxes going to be cut? Will inflationary pressures resurface? We’ll be keeping a close eye on these factors and how they’ll affect the economy as we move ahead.
We’re hearing a lot about AI lately, and it’s exciting to witness the rapid advancements in this field. Major tech companies like Google and Microsoft are in a prime position to leverage these new technologies. We can expect a flood of new products to hit the market, and some may truly be revolutionary. However, many of these products will likely be unnecessary, with AI being used more as a marketing tool than genuine innovation. Remember 3D TVs?
Crypto is another shiny object generating a lot of attention, especially with the new administration mentioning a reserve of crypto. While digital currencies have sparked excitement, we believe these “assets” that are backed by what someone else will pay are unlikely to replace traditional currencies and payment methods like the dollar. The volatility and regulatory uncertainties make it a highly speculative investment better suited for someone who trades all day, and we approach it with caution for the time being.
As you know, our investment strategy is centered on high-quality companies with strong long-term growth potential, prioritizing solid fundamentals and resilience in all market conditions. Staying the course is key, especially after the extraordinary gains of the past two years. The S&P 500's average return over the last 20 years is 7%, so it’s important to manage expectations and not get caught up in the highs or lows of any given year.
If there are any changes in your financial situation, please don’t hesitate to let us know. In the meantime, thank you for your continued trust. We look forward to another great year ahead!
Warmly,
Investment Advisory services offered through Moonstone Asset Management, Inc. a registered investment adviser
Risk Disclosure: Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance does not guarantee future results.
This material is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The content is developed from sources believed to be providing accurate information; no warranty, expressed or implied, is made regarding accuracy, adequacy, completeness, legality, reliability or usefulness of any information. Consult your financial professional before making any investment decision. For illustrative use only.