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Halloween Celebrations with the OA Family
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In October, the Offit Advisors team showed their Halloween spirit at the office with a variety of fun and unique costumes, while Ben and his family took in the trick or treat festivities in Maple Lawn. We hope you and your family had a wonderful Halloween!
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Offit Advisors Webinar Shares the Gift of Financial Literacy with the Next Generation
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In October, Offit Advisors hosted a free special event; Essential Financial Skills for Teens & Young Adults. Check out a recording of the seminar above, and be sure share it with the young people on your life.
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OA's Sophia Trakhtman Participates in EmpowHER Wealth Conference
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Also in October, Sophia was a sponsor and panelist at EmpowHER Wealth: Empowering Women Through Mentorship event. The event was designed to empower women to achieve their financial goals and build wealth with confidence.
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Ben Attends Beer, Bourbon, & Bags Event
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Ben attended Blossoms of Hope's Beer, Bourbon, and Bags event, to support their various missions. For a more in-depth insight into Blossoms of Hope, visit https://blossomsofhope.org.
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Top 10 Year-End Financial Planning Considerations
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As the year draws to a close, it’s important to review your financial situation to make the most of opportunities for tax savings, contributions, and long-term planning. Here are the top 10 year-end financial considerations you should be aware of:
- Maximize Your 401(k) Contributions
If you're not already contributing enough to take full advantage of your employer’s 401(k) match, now is the time to make sure you're doing so. The match is essentially free money, and contributing to your 401(k) can reduce your taxable income, allowing your savings to grow tax-deferred.
- Contribute to an HSA and Use Your FSA Before It’s Too Late
Health Savings Accounts (HSAs) are one of the most tax-advantaged accounts available. Contributions are tax-deductible, the funds grow tax-free, and withdrawals for medical expenses are tax-free as well. If you're eligible for an HSA, maximize your contributions. Additionally, if you have a Flexible Spending Account (FSA) through your employer, use any remaining funds before the year ends to avoid forfeiting them due to the “use it or lose it” rule.
- Take Advantage of Charitable Giving and Donor-Advised Funds (DAFs)
Year-end giving is a great way to reduce your taxable income. If you're charitably inclined, consider donating appreciated assets such as stocks or real estate. This strategy allows you to avoid paying capital gains tax while also receiving a charitable deduction for the full value of the asset. If you plan on making significant charitable gifts, consider setting up a Donor-Advised Fund (DAF). A DAF allows you to contribute funds, receive a tax deduction in the year of contribution, and then distribute those funds to charities over time, maximizing your charitable impact.
- Review Your Investment Portfolio
This is an ideal time to review your investment portfolio to ensure it aligns with your long-term goals. Consider rebalancing your investments and employing tax-loss harvesting to offset any capital gains. This can help reduce your overall tax liability and position your portfolio for the year ahead.
- Roth IRA Conversions for Low-Income Years
If your income has been lower than usual this year, consider converting some or all of your traditional IRA into a Roth IRA. Paying taxes on the conversion at a lower tax bracket can set you up for tax-free growth in the future, which is a smart strategy for years with lower taxable income.
- Plan for Required Minimum Distributions (RMDs)
If you're 73 or older, make sure you’ve calculated and withdrawn your Required Minimum Distributions (RMDs) from your retirement accounts. Failure to take RMDs can result in significant penalties, so it’s crucial to withdraw the funds before the year ends.
- Review Your Estate Plan
Reviewing your estate plan is especially important if your life circumstances have changed. This includes updating your will, trusts, and beneficiary designations to reflect your current wishes. Any changes in your family, assets, or goals should be incorporated before the end of the year to ensure your plan is up-to-date.
- Review Your Tax Withholdings and Look for State-Specific Tax Benefits
If you've experienced any major life changes, now is the time to check whether your tax withholding is accurate. Additionally, research any state-specific tax incentives that may apply to you, such as deductions for college savings plans or retirement contributions. Adjusting your withholding or taking advantage of state-specific deductions can help you reduce your tax burden.
- Review Your Debt Strategy and Insurance Coverage
If you're carrying high-interest debt, consider paying it down or refinancing to improve your financial outlook for the upcoming year. Additionally, reviewing your insurance coverage, including life, auto, and health insurance, ensures that your policies meet your needs and could even help you save money. Evaluate whether additional coverage, such as disability insurance, could further protect you and your family.
- Plan for Next Year’s Financial Goals
As the year ends, now is a good time to set clear financial goals for the upcoming year. Consider your savings targets, retirement plans, and investment strategy. Starting the year with specific goals will help you stay on track and achieve financial success.
These year-end financial planning considerations offer valuable opportunities to optimize your tax strategy, improve your savings, and align your financial goals for the new year. By taking action now, you can position yourself for a successful and financially secure future.
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Cam McCormick, the tight end on the University of Miami’s football team, is a 26-year-old ninth-year senior who, due to an injury-plagued career, is still playing college football despite entering college in 2016.
The Wall Street Journal, September 26, 2024
The American one-cent piece is the single most-produced coin in history. A conservative estimate holds that there are 240 billion pennies lying around the United States—about 724 for every man, woman, and child residing there, and enough to hand two pennies to every bewildered human born since the dawn of man.
The New York Times, September 1, 2024
A U.S. storage company calculated pi to 105 trillion decimal places using supercomputers. The calculations took 75 days to complete and used up 1 million gigabytes of data. NASA scientists only need to know the first 15 decimal places of pi to understand most of the universe.
LiveScience, March 15, 2024
Your parents were right—you can lose your job over what you post online. Due to a loss of confidence, a Navy commander was relieved of his duties after a photo surfaced of him using a rifle with the scope mounted backward.
Morning Brew, September 8, 2024
Despite 62% of workers saying that a job offering paid time off for vacations was “extremely important” to them, just 48% of U.S. workers took all the paid time off offered.
Wowledge, August 11, 2024
Danny Jansen began the major league baseball season with the Toronto Blue Jays, whose June 26 matchup with the Boston Red Sox was suspended during the second inning by rain while Jansen was at bat. When the game resumed last week, Jansen had been traded to the Red Sox, making him the first person in baseball history to play for each of the two teams during a single game.
Major League Baseball, August 26, 2024
“I’m not a prude about it, but to quite an extent, gambling is a tax on ignorance.”
Warren Buffett
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Weak Second Half of the Month Sends Stocks Lower; Bonds Struggle with Rates Moving Higher
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HIGHLIGHTS:
- Stocks started the month strongly with the three major U.S. equity indices putting in new all-time highs – a bit of a broken record here. However, stocks paused later in the month, which ultimately led to declines for October.
- After a five-month winning streak, bonds fell rather sharply in October and yields surged higher. Year to date returns remained positive for most bond sectors, but October put a dent in those results. The 10-year U.S. Treasury yield ended September at 3.81% but rose to close October at 4.28%. The last 4%+ yield for the 10-year U.S. Treasury prior to October was seen in late July.
- The U.S. economy continued to grow with some signs of slowing, but also showed some signs of resiliency. The ISM Manufacturing Index remained below 50 in September, but the Non-Manufacturing Index rose more than expected to 54.9. Job market activity has slowed recently, but September data showed strength with over 100,000 more jobs added than expected and the unemployment rate dropping to 4.1%.
- October was the last month of 2024 without an FOMC meeting, and the market is still anticipating additional cuts at the final two meetings of 2024. With recent strength in economic data, the expected pace of rate cuts has slowed modestly with the expected Fed Funds target between 3.50%-3.75% by December 2025. (Per the CME FedWatch tool as of 10/31/24.)
Equity Markets
After the major U.S. equity indices posted new all-time highs early in the month, stocks slid lower to close out October in negative territory. Large-cap growth held up the best in what was a challenging month. See Table 1 for equity results for October 2024, year to date, and calendar year 2023.
Table 1
| Index |
Oct 2024 |
YTD |
2023 |
| S&P 500 |
-0.91% |
20.97% |
26.29% |
| S&P 500 Equal Weight |
-1.63% |
13.29% |
13.87% |
| DJIA |
-1.26% |
12.50% |
16.18% |
| Russell 3000 |
-0.73% |
19.75% |
25.96% |
| NASDAQ Comp. |
-0.49% |
21.24% |
44.64% |
| Russell 2000 |
-1.44% |
9.56% |
16.93% |
| MSCI ACWI ex U.S. |
-4.91% |
8.61% |
15.62% |
| MSCI Emerging Mkts Net |
-4.45% |
11.66% |
9.83% |
Source: Bloomberg 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. As of 10/31/24
The recent broadening of the stock market that occurred in the third quarter paused as large-cap growth had better relative results in October, but those results were still negative. After such a strong run in stocks, seeing a modest pause in gains is not unexpected and year-to-date results are still very strong.
Emerging markets had some of the best monthly results in September, advancing over 6.6%, but posted some of the worst monthly results in October, ending down almost 4.5%. International stocks in general struggled as well in October as the MSCI ACWI ex US lost nearly 5%, which pushed year-to-date returns back to single digits. Small-caps, despite some impressive returns in the third quarter, dropped in October and they too fell back to single-digit returns year to date.
Despite weakness in October, stocks have enjoyed solid gains in 2024 led by large-caps and growth, but with broad participation in U.S. equities. International stocks have lagged the U.S., repeating a pattern of recent years.
Fixed Income
After hitting the highest level of the year in April, the 10-year U.S. Treasury yield declined for five months setting up a better backdrop for bonds. However, in October, the 10-year yield rose to its highest level since the summer. The 10-year U.S. Treasury yield ended September at 3.81%, but rose to close October at 4.28%. This sharp rise in yields put pressure on bond prices during the month and returns struggled. Once again, the area that stood out was high-yield bonds, which only fell marginally as they are less interest rate sensitive compared to other areas of the bond market. See Table 2 for fixed income index returns for October 2024, year to date, and calendar year 2023.
Table 2
| Index |
Oct 2024 |
YTD |
2023 |
| Bloomberg U.S. Agg |
-2.48% |
1.86% |
5.53% |
| Bloomberg U.S. Credit |
-2.41% |
2.69% |
8.18% |
| Bloomberg U.S. High Yld |
-0.54% |
7.42% |
13.44% |
| Bloomberg Muni |
-1.46% |
0.81% |
6.40% |
| Bloomberg 30-year U.S. TSY |
-5.42% |
-4.07% |
1.93% |
| Bloomberg U.S. TSY |
-2.38% |
1.36% |
4.05% |
Source: Bloomberg 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.
Declines in October had a significant impact on the overall year-to-date results for most bond sectors. The more rate sensitive sectors (like 30-year U.S. Treasuries) were hit hardest by this jump in rates. High yield bonds have had a steadier run this year as they often follow what is happening with stocks, and they have been the leaders in 2024 for the bond market.
At the start of the year, we said we thought the 10-year U.S. Treasury yield would be in a range between 3.25% and 4.5% in 2024 (acknowledging that we got above that level in April). The trend in rates was lower since those April highs but that reversed in October. We believe Fed rate cuts will impact the front end of the yield curve more dramatically, but that the general trend will be for rates to move lower. We continue to anticipate elevated volatility in bonds as we move through the election and the market adjusts to the pace of the Fed rate cut cycle as it develops.
We maintain our long-standing position favoring credit versus pure rate exposure in this interest rate environment and that has served us well so far in 2024. We also believe the role bonds play in a portfolio, to provide stable cash flow and to help offset the volatility of stocks in the long run, has not changed. Furthermore, we believe that bond yields remain attractive, and we believe we are seeing some of the best bond yields in years. The move higher in rates in October only adds to that thinking. In our opinion, having an active bond management approach makes sense in these volatile times.
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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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Miracle Mile Advisors LLC (“MMA”) is a registered investment advisor. Advisory services are only offered to clients or prospective clients where MMA and its representatives are properly licensed or exempt from licensure. The information is illustrative, and is provided for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor's particular investment objectives, strategies, tax status or investment horizon. You should consult your attorney or tax advisor. The views expressed in this commentary are subject to change based on market and other conditions. These documents may contain certain statements that may be deemed forward‐looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Any projections, market outlooks, or estimates are based upon certain assumptions and should not be construed as indicative of actual events that will occur. All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability or completeness of, nor liability for, decisions based on such information and it should not be relied on as such. No investment strategy or risk management technique can guarantee returns or eliminate risk in any market environment. All investments include a risk of loss that clients should be prepared to bear. The principal risks of MMA's strategies are disclosed in the publicly available Form ADV Part 2A. Past performance shown is not indicative of future results, which could differ substantially. This message is confidential and subject to terms at: https://miraclemileadvisors.com/disclosures/ including on awards/rankings, confidentiality, legal privilege, viruses and monitoring of electronic messages. If you are not the intended recipient, please delete this message and notify the sender immediately. Any unauthorized use is strictly prohibited.
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