Welcome to our March 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: 3/20/2024
Mag 7 is so 2023
The now famed Mag7 stocks [MSFT, AAPL, NVDA, AMZN, META, GOOG/L, TSLA] tore through 2023, but 2024 has been a different story. Nvidia and Meta have continued their dominance and increased their size near the top of the S&P 500 index, but the other 5 companies have normalized. So much so that the magnificent 7 aren’t all that magnificent anymore. Only Nvidia and Meta have year-to-date returns that rank them in the top 10 among the S&P 500. Amazon, with the next best return, is 86th and Tesla brings up the rear with the worst return in the index. Despite the Mag7 disbanding, the index is still up nearly 9% in 2024, meaning the breadth of returns has grown outside just the largest holdings. But – it will take more than a few months for the performance of the top 10 to not mean as much. They still make up 33.7% of the index and thus have a greater impact on the overall return. (Source: Visual Capitalist)
THE RISE OF FINFLUENCERS *EMOTIONAL*
Did I pull you in with my fun YouTube clickbait title? No? Color me surprised. What may not have worked on you is working on a lot of younger people. And working enough to have the term ‘finfluencer’ coined. According to a paper published by the CFA institute and authors Serena Espeute and Rhodri Preece, CFA, (and my own experience scrolling through YouTube/TikTok/Instagram) “social media influencers are becoming a key vehicle to promote products and services, including in the financial services sector…They provide general investment information, promote investment products, offer guidance, and, in some instances, make investment recommendations.” While influencers are not a new thing, the promotion of investment products is and can be a slippery slope. Some people may not understand what they’re promoting or, on the other side, what they’re buying. (Source: CFA Institute)
- FINRA fined M1 Finance $850,000 as part of a settlement addressing alleged improper use of social media influencer program
- Network of Youtube financial influencers hit with class action suit for pumping up FTX
- Being a Financial Influencer Is Fun – Until You’re Fined!
Update on Interest Rates
There has been no movement from the Fed on interest rates in 2024. This afternoon will be another rate decision from the Federal Open Market Committee and the expectation is, again, no change. The chart below is still anticipating interest rates being below 4% to start 2025, which means over 1% of rate cuts are still expected in the next 9 months. With rates remaining elevated above 5%, yields for cash will also remain strong. Consider a money market fund for any excess cash in bank accounts to potentially earn additional yield. For example, the Schwab Value Advantage Money Market has a current annual yield of 5.18%. (Source: JPMorgan)
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