Offit Advisors & The Greene Turtle Host March Madness Happy Hour
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We were thrilled to host a happy hour for tenants in our Columbia office building earlier this month to get to know our neighbors, enjoy some great food and drinks, and share a little bit of Financial Planning knowledge along the way. Special thanks to our co-host The Greene Turtle for helping to make this event possible.
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OA attends Kestra Ascend Conference in Austin
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The Offit Advisors team went to Austin, Texas in February for the Kestra Ascend Conference. It was a great experience to go to our home office, interact with other advisors from around the country, and learn about the markets, economy, practice management, and have a great time together!
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Are you being impacted by credit card debt, student loans, or another "wealth killer?" Ben checks in to discuss.
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50 Tips to Help You Retire by Age 50
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Check out this article from GOBankingRates.com featuring Offit Advisors' Financial Advisor & Financial Planning Specialist Rachel Burk, who offers some tips on how to retire by the time you turn 50.
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proACTION℠ Planning Series
Episode 5 | Emergency Funds; How to Use & Structure Them
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Join Ben Offit, CFP® and Laura Sendldorfer, CIC to better understand how you can use and structure an emergency fund to protect you and your family when the unexpected happens.
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Apartment rents fell in every single major metropolitan area in the U.S. over the past six months through January. This is the first time in five years that rents fell every month over a six-month period.
The Wall Street Journal, February 27, 2023
Since 2007, the U.S. Senate Select Committee on Ethics, which investigates allegations of misconduct by Senators and staff, has received 1,523 complaints that alleged rule violations. Over the course of the past 16 years, the committee has voted to issue disciplinary sanctions in zero cases.
Raw Story, February 22, 2023
Spain's government has been shamed after spending millions on trains because they don’t fit through its tunnels. In June 2020, Spanish railway giant Renfe commissioned the manufacturing of 31 trains with dimensions that have now been discovered not to conform to the railway network on which they were going to travel.
Express, February 13, 2023
U.S. healthcare spending grew 2.7% in 2021, reaching $4.3 trillion or $12,914 per person. As a share of the nation’s Gross Domestic Product, healthcare spending accounted for 18.3 percent.
CMS.gov, December 15, 2022
“Winter is not a season, it’s an occupation.”
Sinclair Lewis
“Bad times traditionally produce good books”
Salmon Rushdie
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Inflation Fears Rattle Market as Stocks and Bonds Decline in February
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Highlights
- February saw stocks and bonds give back some of the strong gains from January after some economic data showed a rather “hot” economy.
- After hitting a 52-week low at the very beginning of February at just over 17 on an intraday basis, the VIX Index closed February at 20.70 as volatility rose.
- The 10-year U.S. Treasury yield closed January at 3.52%, but as fear grew that the Fed might stay more aggressive, it spiked to just below 4% during the month. It closed February at 3.92% and bonds struggled as rates rose.
- The FOMC raised rates at its first meeting of the year on February 1 by 0.25% as expected. The “step down” in rate hikes continues and we believe we are in the late innings of this rate hike cycle.
- Economic data continued to be mixed but a strong payroll number and higher than expected inflation readings fueled concerns that the Fed will likely need to raise rates higher and keep them there for longer than previously expected. We seem to be in a “good news is bad news” cycle as it relates to the economy and potential monetary policy action.
Equity Markets
| Index |
Feb 2023 |
YTD |
| S&P 500 |
-2.44% |
3.69% |
| DJIA |
-3.94% |
-1.13% |
| Russell 3000 |
-2.34% |
4.39% |
| NASDAQ Comp. |
-1.01% |
9.61% |
| Russell 2000 |
-1.69% |
7.89% |
| MSCI ACWI ex U.S. |
-3.51% |
4.32% |
| MSCI Emerging Mkts Net |
-6.48% |
0.90% |
For illustrative purposes only. Indexes are unmanaged and have been provided for comparison purposes only. No fees or expenses are reflected. You cannot invest directly in an index.
The trend from January of outperformance of small-caps and growth stocks continued in February despite declines across the board. However, January gains were enough to keep all the major indices, except for the Dow Jones Industrial Average, in positive territory year to date. As interest rates rose during February, the U.S. dollar strengthened and that created a headwind to international stocks. Emerging markets were particularly hard hit in February and were able to only hold onto modest year-to-date gains. The broader measure of international stocks, the MSCI ACWI ex U.S. Index, was also among the hardest hit areas in February, but it continued to hold onto solid gains year to date after a strong start to the year in January.
Growth outperformed value in February continuing the trend from January. For example, the Russell 1000 Growth Index declined -1.19% for the month, while the Russell 1000 Value Index fell -3.53%.
Small-caps fared better than large-caps in February as can be seen in Table 1, but growth also outperformed on a relative basis in the small-cap space. The Russell 2000 Growth Index slipped -1.08%, while its value counterpart fell -2.31%. Please see Table 1 for equity index returns for February and year to date.
The VIX Index hit a 52-week low in early February, just above 17 on an intraday basis (after the Fed raised rates by 25 basis points), but that gave way to higher volatility during most of the rest of the month as stocks weakened. The VIX Index closed February at 20.70, higher for the month and just about 1 point lower than where it ended 2022.
Fixed Income
| Index |
Feb 2023 |
YTD |
| Bloomberg U.S. Agg |
-2.59% |
0.41% |
| Bloomberg U.S. Credit |
-3.01% |
0.69% |
| Bloomberg U.S. High Yld |
-1.29% |
2.47% |
| Bloomberg Muni |
-2.26% |
0.55% |
| Bloomberg 30-year U.S. TSY |
-4.45% |
1.38% |
| Bloomberg U.S. TSY |
-2.34% |
0.11% |
For illustrative purposes only. Indexes are unmanaged and have been provided for comparison purposes only. No fees or expenses are reflected. You cannot invest directly in an index.
February was a challenging month for bonds as rates rose rather dramatically. The 10-year U.S. Treasury closed January at 3.52% but it rose to 3.92% by the end of February and this backdrop of rising rates took a toll on bond returns. The more interest-rate sensitive parts of the bond market, like U.S. Treasuries, were most impacted by rising rates compared to those pockets of bonds that are somewhat less sensitive, like high yield bonds. However, bonds were weaker across the board in February and those declines took away much of the strong gains from January, but bonds are still positive so far this year. High yield bonds stand out with their strong relative performance in February and overall positive performance year to date. Please see Table 2 for fixed income returns for February and year to date.
As we have previously stated, we believe the move higher in rates in 2022 has largely run its course at the longer end of the yield curve and we expect the 10-year yield to move lower as we go through 2023. Volatility is expected along the way and rates moved up in February, but we think the broader trend will be lower.
As has happened in previous Fed rate hike cycles, longer rates have started to come down before the Fed has stopped raising the Federal Funds rate. The market seems to now be pricing in the idea that the Fed might raise rates higher and keep them at those levels for longer than previously expected.
We maintain our long-standing position favoring credit versus pure rate exposure in this interest rate environment. We also believe that the role bonds play in a portfolio, which is to provide stable cash flows and to help offset the volatility of stocks in the long run, has not changed.
Source: Clark Capital Benchmark Review, February 2022
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S&P 500 Index is an unmanaged group of securities considered to be representative of the stock market in general. You cannot directly invest in the index.
Dow Jones Industrial Average - The Dow Jones Industrial Average is a popular indicator of the stock market based on the average closing prices of 30 active U.S. stocks representative of the overall economy.
NASDAQ Composite Index measures all NASDAQ domestic and international based common type stocks listed on The NASDAQ Stock Market. Today the NASDAQ Composite includes approximately 5,000 stocks, more than most other stock market indices. Because it is so broad-based, the Composite is one of the most widely followed and quoted major market indices.
Russell 2000® Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index, which represents approximately 8% of the total market capitalization of the Russell 3000 Index which includes the 3,000 largest companies in the U.S., based on market capitalization. As of the latest reconstitution, the average market capitalization was approximately $762.8 million; the median market capitalization was approximately $613.5 million. The largest company in the index had an approximate market capitalization of $2.0 billion and a smallest of 218.4 million.
Russell 1000® Growth Index measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values.
Russell 1000® Value Index measures the performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values.
Government bonds are guaranteed by the U. S. Government and, if held to maturity, offer a fixed rate of return and fixed principal value.
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Securities offered through Kestra Investment Services, LLC (Kestra IS), Member FINRA/SIPC. Investment Advisory Services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Offit Advisors is not affiliated with Kestra IS or Kestra AS. Offit Advisory Services, LLC is a tax firm but neither Kestra IS nor Kestra AS provide legal or tax advice and are not Certified Public Accounting firms.For more information on the Five Star Wealth Manager and the research/selection methodology go to: www.fivestarprofessional.com. Investor Disclosures: https://bit.ly/KF-Disclosures
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