Doug English with ACT Advisors, brings you your February 2024 financial update. January has set a positive tone for the year, with the stock market seeing some movement, albeit with mixed results across different sectors. Let’s explore how these developments might impact your investments and what to expect in the coming months.

January Market Recap: A Mixed Start

January started the year on a cautiously optimistic note. The stock market saw a modest increase of around 1%, but this growth was concentrated in the mega-cap stocks—the very largest companies. Meanwhile, other sectors experienced slight declines of about 3% to 4%. Despite these fluctuations, the overall market showed resilience.

On the bond side, January was marked by volatility, driven by fluctuating expectations regarding interest rates. Although there was a slight decrease in rates at the end of the month, the bond market overall experienced a small decline of about a third of a percent.

Given these conditions, you can expect your accounts to show returns between 0% and 1% for January. While these may seem modest, Doug English points out, “A 1% return per month would be a wonderful return for the year, right? We would love to see that continue.”

The January Effect and Market Outlook

The “January Effect” is a phenomenon where a strong performance in January often predicts a positive year ahead. However, as Doug English cautions, “There’s a lot ahead of us.” The key factor moving forward will be the Federal Reserve’s pace in decreasing interest rates. The market will be closely watching every word from the Fed, as these decisions will heavily influence market dynamics throughout the year.

Historically, when we see a significant market breadth thrust, like we did in November and December of last year, it often leads to a less positive first quarter, with stronger returns coming later in the year. This suggests that we might need to be patient in the early months of 2024.

Strategic Portfolio Adjustments

At ACT Advisors, we continuously monitor market conditions and adjust portfolios to align with our clients’ financial goals. For February, we are maintaining our position in technology stocks, specifically holding the QQQ ETF, which performed well in January. This ETF focuses on large-cap, tech-heavy stocks, which have shown strong momentum.

In the bond rotation strategy, we are making a minor adjustment: We are selling municipal bonds and adding preferred securities to the bond rotation. This change reflects our ongoing efforts to optimize your portfolio’s performance in a shifting interest rate environment.

Tax Season Tips and Client Appreciation

As tax season approaches, many of you are already reaching out for your 1099 forms. Doug English reminds clients that LPL or Schwab will send these forms directly to you, and ACT Advisors does not receive them any sooner. A key point to remember is that 1099 forms for non-qualified, taxable accounts are often revised late in the season, typically around mid-March.

Doug advises, “It’s frustrating, but it happens across the industry. We recommend getting your taxes fully prepared with your CPA but waiting until around March 15 to file, just in case a revised 1099 comes through. This delay tends to work in your favor by reducing your tax burden.”

Lastly, a heartfelt thank you to all clients who have taken the time to write a Google review for ACT Advisors. Your reviews are making a significant impact, helping others find a high-quality financial planning and investment management firm. Doug English expresses his gratitude, saying, “Thank you very much for your business. 2023 was a wonderful year for you and for us, and we look forward to supporting you in 2024.”

Doug English, a seasoned financial advisor and co-founder of ACT Advisors, brings years of expertise and insight to his clients. ACT Advisors, located in Asheville, specializes in providing personalized financial planning services to help clients achieve their long-term financial goals. Known for their client-focused approach and innovative strategies, ACT Advisors is dedicated to guiding you through every step of your financial journey.

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