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We feel really comfortable with you and your team and trust your judgment completely.
– Paul and Susan
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The testimonials presented are made by individuals who are clients of Offit Advisors and are applicable only to the individuals depicted and may not be representative of the experience of others. The testimonials are not paid nor have the participants received any non-cash compensation and are not indicative of future performance or success. The testimonials have been evaluated for conflicts of interest and have not been found to present any conflicts.
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Meeting Local Celebrities!
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September brought a personal thrill Ben's way, as he was able to meet two of his heroes.
First, Ben connected with University of Maryland alum and Under Armour CEO and Founder Kevin Plank at a Terrapins football game. Ben was an a Business and Entrepreneurship major at College Park, and Kevin's incredible journey with UA inspired a wave of entrepreneurs at UMD. Kevin was extremely gracious, and particularly loved meeting Ben's son Nate at the game.
It got even better later in the month when Ben got the chance to meet Baltimore Orioles legend and Major League Baseball Hall of Famer Cal Ripken Jr. at his charitable event in Annapolis. Ben told "The Ironman" how much he treasures the baseball glove Cal signed for him when he was a kid, a glove he still has framed today. And he was even kind enough to sign a book about his life that Ben reads with his kids at night before bed; A book the boys love!
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OA to Host October Financial Literacy Event for Teens and Young Adults
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We are committed to bringing financial literacy to the next generation. Next month, Offit Advisors will host a free special event; Essential Financial Skills for Teens & Young Adults. This event will be held both in person and virtually, so please be sure to share with your family, extended family, and friends.
It's not too late to get registered. Click the link below to sign up!
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Important Information about Maryland Saves Program for Maryland Employers
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This is a reminder to Maryland Business owners that registering for Maryland Saves must be done annually in order to receive the $300 SDAT waiver. that Maryland Saves is a program is for employers who have a retirement program in place for their employees.
The deadline to complete registration for the 2025 SDAT Annual Report Filing Fee is December 31, 2024. Click the link below to claim your waiver.
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Earlier this month. Zach traveled to Peru; His first visit to South America. Zach immersed himself in Peru's rich culture and learned about the history of the country. Highlights of the his trip included exploring the awe-inspiring Machu Picchu, hiking Machu Picchu Mountain, participating in a traditional cooking class, and attending a textile demonstration. Zach also visited Peru's fascinating salt mines, and had the privilege of connecting with local communities while experiencing the welcoming culture and authenticity of the Peruvian people.
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What's "Normal" for the Stock Market?
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Stock market behavior can be confusing, especially with calm periods followed by sudden volatility. Many investors wonder: what’s normal for the stock market? Let’s explore key patterns, risks, and strategies to better understand this.
Volatility is Normal
Market volatility—the frequent rise and fall of stock prices—is part of the stock markets's natural cycle. For instance, in 2024, the year began with steady growth, but a sharp drop in August caused widespread concern. While alarming, this kind of volatility is common. Historically, stock market corrections (a decline of 10% or more) happen every 12 to 18 months. The average correction is around 14%, so a downturn of several thousand points in major indexes is typical, though it may seem unsettling.
Look at 2020 during the COVID-19 pandemic, or the 2008 financial crisis—both were periods of significant market declines followed by recoveries. Volatility, while stressful, is part of a healthy market cycle.
Not All Risk is Rewarded
A common misconception is that higher risk always equals higher reward. In reality, not all risk pays off. For example, investing heavily in one stock or a highly speculative sector can lead to large losses. Take Enron as an example—investors who were overly concentrated in the company lost everything when it collapsed due to unethical practices. Risk without proper diversification often leads to poor outcomes.
On the other hand, smart, calculated risks tend to offer better results over time. A diversified portfolio that spreads investments across various asset classes (stocks, bonds, real estate) can manage risk effectively. For example, during market downturns, bonds may outperform stocks, balancing your portfolio’s overall performance.
Diversification: A Key Strategy
Diversifying your investments is one of the best ways to reduce risk while aiming for solid returns. For instance, if you invested in both Apple and Nvidia in recent years, you’d benefit from their growth. But if
you were overly concentrated in just one and it faltered, your losses would be more significant. Spreading investments across different sectors or asset types limits the damage from any single poor performer.
It’s also important to note that about two-thirds of individual stocks underperform the broader market. By diversifying, you protect yourself from the risk of underperformance in a small number of companies.
Understanding Unrewarded Risks
Some risks simply aren’t worth taking. Speculative investments in assets like meme stocks or NFTs (non-fungible tokens) may seem appealing due to social media hype, but they often underperform or collapse. In recent years, many speculative assets, such as SPACs (special purpose acquisition companies), have lost substantial value—some dropping by 70-100%. These investments are highly risky and rarely offer long-term success compared to traditional, diversified portfolios.
Volatility: The Price of Long-Term Growth
While volatility can be unsettling, it’s the price investors pay for higher long-term returns. If markets were perfectly stable, there would be no reward for taking risks. Investors who can tolerate volatility tend to be rewarded. Consider the 2008 financial crisis—many investors panicked and sold, but those who stayed invested or bought more during the downturn saw significant gains as the market recovered.
Short-term market fluctuations aren’t a reason to panic. If you’re in a diversified portfolio, volatility is an opportunity rather than a threat. Staying calm and maintaining a long-term perspective allows you to
benefit from the natural ups and downs of the market.
Conclusion
In summary, volatility is normal in the stock market, and corrections are a healthy part of its cycle. Not all risks lead to rewards, so intelligent investing through diversification is key. By understanding and
accepting volatility, you can position yourself for long-term success. Embrace market fluctuations as part of the investment journey and stay focused on your long-term goals.
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In 2023, some 80% of consumers said they got interested in a product or service through an influencer’s post. Now, Artificial Intelligence influencers are appearing on the scene. Polling shows that Gen Z, the target demographic for influencer marketing, doesn’t care if the influencers are real or fake.
Axios Am, September 7, 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
The average American now eats about 42 pounds of cheese a year, more than all the butter, ice cream, and yogurt combined.
Bloomberg, September 6, 2024
The Fed’s balance sheet is over 20% below its peak from April 2022. That’s the largest drawdown on record.
The Week in Charts, September 3, 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
Work is most fulfilling when you’re at the comfortable, exciting edge of not quite knowing what you’re doing.”
Alain de Botton
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Mixed Month for Stocks, but Bonds Advance in August
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Highlights
- The broad indices were able to overcome a very rough start to the month with the S&P 500 Index closing August higher. Small and mid-cap stocks declined in August, while large-caps advanced.
- Bonds enjoyed gains for the fourth month in a row as rates continued to move lower. The 10-year U.S. Treasury yield ended July at 4.09% and it dropped to end August at 3.91%, hitting its lowest closing yield of the year (3.78%) during the month.
- The U.S. economy continued to show slowing economic activity. The ISM Manufacturing Index remained below 50 in July, but the Non-Manufacturing index bounced back to 51.4. The unemployment rate rose unexpectedly to 4.3% and helped spark a weak beginning to the month for equities.
- There was no FOMC meeting in August, but Fed Chairman Powell’s widely anticipated speech at Jackson Hole, Wyoming more-or-less secured the idea of a rate cut in September. The only debate (from a fed futures perspective based on the CME FedWatch tool) is whether the cut will be 25 or 50 basis points with the odds favoring a cut of 25 basis points as of early September.
Equity Markets
The month started off volatile for stocks. By early August, the S&P 500 had declined by about -8.5% from its recent high in mid-July. However, the panic seemed unwarranted at the time with fundamentals still solid. Markets steadily rebounded from that point for the rest of the month to turn in a positive gain for August. See Table 1 for equity results for August 2024, YTD and calendar year 2023.
Table 1
| Index |
Aug 2024 |
YTD |
2023 |
| S&P 500 |
2.43% |
19.53% |
26.29% |
| S&P 500 Equal Weight |
2.50% |
12.53% |
13.87% |
| DJIA |
2.03% |
11.75% |
16.18% |
| Russell 3000 |
2.18% |
18.19% |
25.96% |
| NASDAQ Comp. |
0.74% |
18.57% |
44.64% |
| Russell 2000 |
-1.49% |
10.39% |
16.93% |
| MSCI ACWI ex U.S. |
2.85% |
11.22% |
15.62% |
| MSCI Emerging Mkts Net |
1.61% |
9.55% |
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.
The recent broadening of the market continued in August. Although the month was marked by large-cap strength once again, large-cap value companies outpaced their growth counterparts. Outside of small-caps, the NASDAQ Composite had the weakest results for the month. The leadership of large-cap growth still holds for the year to date, but small-caps, value stocks, and international companies have narrowed the gap in recent months.
We have often discussed the difference between the returns of the headline, market-cap-weighted S&P 500 Index compared to the equal-weighted version of the same stocks, which is more reflective of what the “average” stock is doing. The returns of these two measures were relatively in-line with each other in August, showing broader participation in the market.
The “average” stock had a better run in July and August, but large-caps still lead year to date. The same holds true that value stocks have had a better run in the last two months. Large value outperformed in July with one example being the Russell 1000 Value Index up 5.11% in July while the Russell 1000 Growth Index declined -1.70%. In August, those returns were 2.68% and 2.08% respectively as value progress continued.
Developed markets advanced and continue to show solid results so far this year, and emerging markets advanced as well, but not to the same degree. Emerging markets are the only index shown on Table 1 without a double-digit gain so far this year. Despite some volatility in August, and some potential volatility as we head towards the election, 2024 has been a strong year for equities to this point.
Fixed Income
After hitting the highest level of the year in April, the 10-year U.S. Treasury yield has declined for the last four months. In August, the 10-year yield hit a new low for 2024. This move lower in rates has helped set up generally positive returns for bonds during this period. Most bond sectors were able to push into positive territory after gains in July and additional gains were added in August. The 10-year U.S Treasury yield ended July at 4.09%. On August 1, the yield closed below 4% for the first time since February and it ended the month at 3.91%. See Table 2 for fixed income index returns for August 2024, year to date, and calendar year 2023.
Table 2
| Index |
Aug 2024 |
YTD |
2023 |
| Bloomberg U.S. Agg |
1.44% |
3.07% |
5.53% |
| Bloomberg U.S. Credit |
1.55% |
3.46% |
8.18% |
| Bloomberg U.S. High Yld |
1.63% |
6.29% |
13.44% |
| Bloomberg Muni |
0.79% |
1.30% |
6.40% |
| Bloomberg 30-year U.S. TSY |
2.35% |
-0.49% |
1.93% |
| Bloomberg U.S. TSY |
1.28% |
2.60% |
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.
The more rate-sensitive sectors (like longer-dated U.S. Treasuries) showed the best results in August as rates continued to drop, but the 30-year U.S. Treasury Index is still negative so far this year. High yield bonds often follow what is happening with stocks, so they posted another solid month of gains in August and have the best results of the bond indices year to date. 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 has been lower since those April highs, and we believe rates will continue to decline through the second half of this year. Furthermore, as the Fed likely begins to cut rates in September, we believe front end rates could start to decline rather dramatically after remaining stubbornly high so far this year.
We maintain our long-standing position favoring credit versus pure rate exposure in this interest rate environment. 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 are seeing some of the best bond yields in years. 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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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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