Market Review
In the third quarter, U.S. stocks returned 6.2% and developed international stocks bounced back to earn over 8%. Emerging markets were also up 8.24% for the quarter. I can’t remember a recent time when international stocks have outperformed US Stocks. There’s always a part of your portfolio that you hate and international has fit that bill for the last decade or more. I’m glad to see some upward kick. Maybe I need to tell my wife we need to buy some more Leeds United gear and support our UK economy.
Bonds came out flying and grabbed 5.2% for the quarter (this is high flying for bonds). Remember back in 2022 when bonds had their worst year – maybe ever! Well the thing with bonds is that they beat to a regular cadence. They pay interest and then pay back your principal. As interest rates rose, bond prices (not returns) got smashed. This affected returns for that year, but now we see bonds earning things back. The bonds now are paying much higher interest rates which has increased their returns. So if you stuck with your bonds, you’re going to be OK. We sure did.
REITs were up over 16% for this last quarter. Love real estate or hate real estate, we’re glad we own it.
The usual visuals are below (notice how many asset classes have lost money over the last 5 years – zero!):
Index performance is provided as a benchmark. It is not illustrative of any particular investment. An investment cannot be made in an index. Past performance is not an indication of future results. Russell 3000 Index, MSCI World ex USA Index, MSCI EM Index, S&P Global REIT Index, US Aggregate Bond Index. Returns as of 9/30/2024.
Economic Review
[Keep in mind: the economic data usually lags a bit]
Real (inflation adjusted) GDP grew at 3% in the 2nd quarter over Q2 2023.
The latest inflation reading in September has it falling down to 2.4%. We’re closer to the Feds target inflation rate of 2%.
The Fed dropped rates in September by 0.5% to a target range of 4.75 – 5.0%.
30-year mortgages have settled and have dropped over the last quarter to settle around 6.1%.
Housing prices continue to rise across the country from where they were a year ago (up about 5%).
Unemployment remained at 4%.
Tax, Legal, & Legislative Updates
- Social security cost of living adjustment will be a 2.5% increase in 2025
- We’ll have a new President in 2024 – TBD
