Welcome to our July 2024 Viewpoints, a monthly bulletin from PDS Planning to our valued clients and friends. Our goal with each issue of Viewpoints is to provide you with a wide variety of perspectives on life and wealth. Feel free to share with others.
By Drew Potosky, CFP®,
Posted: 7/30/2024
Leading Indicators Update
The year-over-year [YoY] Leading Economic Indicators change has been a popular chart since the precipitous decrease started following the 2020 recovery. I have written about it previously, particularly when it was on its way down, as something to keep a close eye on in relation to the rest of the economy. The darker red vertical columns represent US recessions and each of them have corresponded with a sharp move downward in the YoY change to the leading indicators. Based on the recent data, signs are pointing toward a recovery across these indicators. It doesn’t necessarily signal the economy is out of the woods, but certainly heading in a stronger direction.
Profits Do Matter
Sometimes, looking at the market as a whole can be difficult. In the S&P 500, ‘the market’ has been about 10 stocks. For small caps in the Russell 2000, the difficulty comes from profitability. “About 40% of members in the index have no earnings on a trailing 12-month basis.” Liz Ann Sonders, Chief Investment Strategist with Charles Schwab, goes on to write, “there are ample opportunities within the small cap space, but we would caveat that with a recommendation to stay up in quality, notably by focusing on factors like profitability…” Over the last 1-year, the profitable companies in the Russell 2000 have outperformed the non-profitable companies by 19%.
Quick Note on Interest Rates
The economy posted a softer than expected inflation print leading many to speculate there will the Fed’s first rate cut announced during their upcoming September meeting.
Summer Olympics
The 2024 Summer Olympics have kicked off in France and there have already been loads of exciting races and competitions. From Swimming and Gymnastics to Archery and Rugby, there’s something for everyone. Yesterday, we saw Romanian David Popovici (@chlorinedaddy on social media) win the country’s first gold medal in men’s swimming, winning by just 2 one-hundredths of a second! And for the USA, the men’s gymnastics team brought home the bronze. The first men’s gymnastics medal in 16 years! Plus, Torri Huskie and Gretchen Walsh touched the wall 1 and 2 in the Women’s 100m Butterfly for a Gold and Silver medal.
IMPORTANT DISCLOSURE INFORMATION: Please remember that past performance is no guarantee of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by PDS Planning, Inc. [“PDS”]), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from PDS. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. PDS is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the PDS’ current written disclosure Brochure discussing our advisory services and fees is available for review upon request or at www.pdsplanning.com. Please Note: PDS does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to PDS’ web site or blog or incorporated herein, and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly. Please Remember: If you are a PDS client, please contact PDS, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. Unless, and until, you notify us, in writing, to the contrary, we shall continue to provide services as we do currently. Please Also Remember to advise us if you have not been receiving account statements (at least quarterly) from the account custodian.