Welcoming Sophia Trakhtman to Offit Advisors!
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Offit Advisors is thrilled to welcome Wealth Management Specialist Sophia Trakhtman to our team. Sophia is smart, driven, confident, energetic, and a hard worker, and will bring integrity and high-level communication skills to her role at OA. We are proud to have you on our team Sophia!
Learn a little bit more about Sophia Trakhtman in her own words:
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" As John L Beckley once said, “Most people don’t plan to fail, they fail to plan.” This is where my passion for guiding my clients through an extensive financial education comes in. It is my goal to educate every client that I work with about personal finance and the importance of planning ahead. I am committed to providing my clients with consistent service needed in developing, implementing, and maintaining a comprehensive business and individual strategy.
I am a born and raised Baltimorean, who is the child of Soviet Union immigrants. My parents came here with our entire family in 1991. Trying to provide for a family while learning a new language in a new environment was a very difficult task for my parents. Over 30 years later, they grew the family to five and started a business. Their hard work and determination has resonated with me in my own practice. I am just as determined to provide excellent service for my clients as my family was when they came here.
In the present day, my fiancé and I live in Baltimore Maryland and have two dogs, Asher and Ana. We enjoy traveling to Sunny Isles Florida several times a year to spend time with family. When I am not in my office: I enjoy teaching ballet, practicing yoga and Pilates, and spending time with nieces and nephews.
My main physical office is in Columbia, Maryland, however I often travel to Virginia, Pennsylvania, District of Columbia, and Sunny Isles, Florida."
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Ben and His Son Reed Enjoy a Day at the Office!
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Reed Offit woke up one morning last month with a vision. He wanted to get dressed up in his best business attire and head into the office with his Dad. As you can see, Reed really enjoyed playing some hookie from school, and Ben loved every minute of an unexpected Take Your Son to Work day.
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Make Sure to Update Your Contributions to 401ks and IRAs this year!
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For 401ks, the maximum limit is $23,000 for people under 50, and $30,500 for those over 50. For IRAs, the maximum limit is $7,000 for people under 50, and $8,000 for those over 50.
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Keep your eyes peeled; OA clients will be receiving 1099s for their investment accounts by the end of February.
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Building a Life of Success: Lessons from a Master Investor - Charlie Munger
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Last month, renowned investor and partner of Warren Buffet, passed away at the age of 99. I feel this is a good time as any to honor the man and his endless wisdom. Here are a few of his infamous quotes and lessons he taught us:
"A lot of people with high IQs are terrible investors because they've got terrible temperaments."
While intelligence plays a role in achieving success, a calm and controlled mind is often more valuable. Qualities like patience, discipline, and emotional stability become the true cornerstones of wise decision-making.
"Remember that reputation and integrity are your most valuable assets—and can be lost in a heartbeat."
Building trust and maintaining a good reputation takes time and effort, but it can be shattered in an instant by unethical behavior or poor choices. Munger's advice encourages us to act with integrity in all aspects of life, recognizing that a strong reputation is essential for long-term success and happiness.
"Go to bed smarter than when you woke up." AND “Develop into a lifelong self-learner through voracious reading; cultivate curiosity and strive to become a little wiser every day.”
The pursuit of knowledge and wisdom is a lifelong journey. He emphasized the importance of learning from the experiences and insights of others, rather than trying to reinvent the wheel. This continuous learning can be achieved through voracious reading, seeking mentors, and engaging in open-minded discussions. Munger's own dedication to learning is evident in his statement, "I believe in the discipline of mastering the best that other people have ever figured out. I don't believe in just sitting down and trying to dream it all up yourself. Nobody's that smart."
"It's so simple to spend less than you earn, and invest shrewdly, and avoid toxic people and toxic activities, and try and keep learning all your life, and do a lot of deferred gratification. If you do all those things, you are almost certain to succeed. If you don't you're going to need a lot of luck."
Munger outlines a straightforward formula for building a successful life: He emphasizes the importance of living below your means, investing wisely, avoiding negativity, learning constantly, and practicing delayed gratification. These seemingly simple principles, when consistently applied, can pave the way for a fulfilling and prosperous life.
"In my whole life, I have known no wise people (over a broad subject matter area) who didn't read all the time — none, zero."
Charlie emphasized the critical role of reading in developing wisdom and understanding. His own dedication to learning through reading serves as a testament to the power of this habit.
"The big money is not in the buying and selling, but in the waiting."
"The first rule of compounding: Never interrupt it unnecessarily."
Munger's message is clear: invest with a long-term perspective and resist the urge to constantly churn your portfolio and by doing so, investors can unlock the true power of the market and achieve significant wealth creation.
The words and principles of Charlie Munger offer valuable insights for building a successful and fulfilling life. By cultivating emotional stability, prioritizing integrity, embracing lifelong learning, and adopting simple but effective strategies, we can navigate the complexities of life and achieve our goals. Munger's message is a reminder that success is not solely dependent on intellect, but rather on a combination of wisdom, discipline, and a commitment to continuous learning and growth.
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It is estimated that U.S. consumers will return $173 billion in goods between Thanksgiving and the end of January.
Chain Store Age, January 2, 2024
The U.S. government spent more on health care in 2022 than six countries with universal health care combined.
StatNews, December 19, 2023
Researchers suggest that only 9% of Americans who make New Year’s resolutions complete them. In fact, research goes on to show that 23% of people quit their resolution by the end of the first week, and 43% quit by the end of January.
Fisher.OSU.edu. February 2, 2023
The Magnificent Seven (Apple, Microsoft, Google, Amazon, Nvidia, Tesla, and Meta) now have a higher weighting in the MSCI World Index than all of the stocks in the UK, China, France, and Japan combined.
The The Wall Street Journal, December 17, 2023
The inventor of the wind chill factor died this week. He was 86, but he felt more like he was 64.
Annonymous
“The secret to successful investing is relatively simple: Figure out the value of something and then pay a lot less.”
Joel Greenblatt
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2023 Ends Strongly as Rally Continued in December
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Highlights
- The last two months of 2023 drove returns in many parts of the market for the entire year. The stock market rally broadened in December and underperforming areas like small-cap stocks rose sharply to turn in solid annual gains. Large-cap growth still dominated the year, but 2023 turned out to be a strong year overall for stocks.
- Yields continued to fall in December. The yield on the 10-year U.S. Treasury closed November at 4.37% and dropped to end the year at 3.88%. This drop in rates from the October highs and subsequent rally in bond prices resulted in solid bond returns for 2023 – again, driven primarily by late-year gains.
- Much of the rally in stocks and bonds can be attributed to the market’s strengthening belief that this rate-hike cycle is finished. The first FOMC meeting of 2024 occurs at the end of January and the fed fund futures are pricing in a first right hike occurring in March. We’ll see.
- The U.S. economy continues to grow, but Q4 growth will likely pale in comparison to the torrid pace of growth from Q3. While odds have likely increased for a “soft landing,” there is still a possibility of a mild recession, and that potential outcome should not be ignored.
- Finally, corporate earnings are improving and expected to grow in calendar years 2023 and 2024. While expected earnings growth has moderated somewhat for 2023, earning expectations for 2024 have remained solid.
Equity Markets
After three straight months of declines through October, stocks rallied in November and December. The rally in December was across the board, but some of the lagging parts of the market rebounded sharply in the last month of the year. Small-caps enjoyed a double-digit monthly gain, which drove most of their 2023 results.
With the market gaining confidence that this Fed rate hike cycle might be over, stocks gained momentum in December and rates dropped dramatically leading to a solid month of returns in both stocks and bonds.
See Table 1 for equity results for December, Q4, and 2023.
Table 1
| Index |
December 2023 |
Q4 |
2023 |
| S&P 500 |
4.54% |
11.69% |
26.29% |
| S&P 500 Equal Weight |
6.86% |
11.87% |
13.87% |
| DJIA |
4.93% |
13.09% |
16.18% |
| Russell 3000 |
5.30% |
12.07% |
25.96% |
| NASDAQ Comp. |
5.58% |
13.79% |
44.64% |
| Russell 2000 |
12.22% |
14.03% |
16.93% |
| MSCI ACWI ex U.S. |
5.02% |
9.75% |
15.62% |
| MSCI Emerging Mkts Net |
3.91% |
7.86% |
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.
In our opinion, 2023 will be remembered for the dominance of large-cap growth. However, the broadening in the market over the last two months of the year led to solid gains across the board in equity markets. The S&P 500 Equal Weight Index, the Russell 2000 Index, and the MSCI Emerging Markets Index show the bulk of their gains came late in the year as most parts of the market outside of large-cap growth were lackluster for much of 2023. The indices driven by large-cap growth companies including the S&P 500 Index, the NASDAQ Composite, and the Russell 3000 showed strong gains in the fourth quarter as well, which added to what was already a strong year of results. The Russell 2000 Index led the broader markets higher in December and those gains drove the overall 2023 results for small-caps.
Broad international equities showed solid returns in December as well. The MSCI ACWI ex. U.S. Index showed returns more or less in line with many parts of the U.S. markets (outside of large-cap growth companies). Emerging markets proved to be the weak spot in 2023, but even with that said, the MSCI Emerging Market Index was up just shy of 10% for 2023. We still see opportunities in international markets with valuations that are lower than the U.S. and our expectation that the U.S. dollar will largely weaken over the short-to-intermediate term. Coinciding with the market gaining confidence around the conclusion of this rate hike cycle, the dollar weakened in November and December and appears to be trending lower.
Fixed Income
After struggling for much of the year, bonds rallied in November and December to turn in solid results for 2023. The grind higher in rates through the summer and into the fall had dragged bond returns down with most major bond indices ending in negative territory year-to-date through October. However, November saw bond yields drop sharply, and bonds staged a significant rally during the month and that momentum continued in December. It is a good reminder that yields can move quickly at times, and it is important for bond investors to stay focused on their long-term goals during periods of volatility. We know the vast majority of a bond’s return is interest income and the reinvestment of that income, but when rates are moving, bond prices can fluctuate in the short term.
The 10-year U.S. Treasury yield dropped in November from 4.88% (October’s close) to 4.37% by the end of November. This move continued lower, and the yield ended 2023 at 3.88%. That decline in rates became a tailwind for bond returns late in the year. An interesting side note, the 10-year U.S. Treasury closed 2022 at that exact yield level of 3.88% as well, but we all know there was a lot of volatility between those two points in time throughout 2023.
See Table 2 for fixed income index returns for December, Q4, and year to date.
Table 2
| Index |
December 2023 |
Q4 |
2023 |
| Bloomberg U.S. Agg |
3.83% |
6.82% |
5.53% |
| Bloomberg U.S. Credit |
4.19% |
8.15% |
8.18% |
| Bloomberg U.S. High Yld |
3.73% |
7.16% |
13.44% |
| Bloomberg Muni |
2.32% |
7.89% |
6.40% |
| Bloomberg 30-year U.S. TSY |
8.71% |
12.85% |
1.93% |
| Bloomberg U.S. TSY |
3.36% |
5.66% |
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 move higher in rates during much of 2023 presented bond investors with opportunities to invest at higher yields and coupons than seen in several years. We expect the 10-year U.S. Treasury yield to move lower as we move into 2024, but we also anticipate volatility along the way. 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 even though rates have dropped rather sharply over the last two months. In our opinion, having an active approach in fixed income can help navigate 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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