"In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value."- Alan Greenspan, Former Chairman of the Federal Reserve Bank
PHOENIX - May 21, 2024 - PRLog -- Our chief investment officer, Udayan Mitra, CFA, analyzes April's financial market.
April 2024 Market Review
- The first quarter of 2023 saw superlative performance before the momentum was disrupted by three successive US CPI reports showing inflation well beyond the 2% target. Markets globally retreated sharply as prospects for Fed rate reductions diminished.
- YTD returns on domestic equities range now from near flat in small and mid-cap stocks to 6.04% in the S&P 500. Bond returns have started to fall as yields across all maturities trend higher due to the cautionary inflation outlook.
- The CPI trend stalled in the first three months but remained consistently above 3%. Housing costs and wage inflation are the primary drivers. Low housing affordability boosts demand for rentals, while a tight labor market drives wage growth.
- The attainability of the Fed's 2% inflation target is questionable, but productivity growth from technology advancements may help offset inflationary effects. Recently, US productivity has spiked due to AI, robotics, digitalization, and quantum computing.
- The aging population affects asset allocation and long-term portfolio potential, increasing the dependency ratio due to retiring baby boomers. We've previously highlighted the growing level of US indebtedness; federal deficits continue at high levels relative to the overall US GDP.
- While we anticipate inflation stabilizing, possibly exceeding the Fed's 2% target, our projections for asset class returns are notably lower compared to 2009-2022.
Trajan Wealth Insights:
- We advocate an elevated level of diversification across asset classes and develop specific asset allocation perimeters that cater to individual risk-tolerance thresholds.
- Given our outlook for moderate returns going forward and the prospect of higher taxes, clients may want to save and invest a greater proportion of their disposable income.
- For eligible clients, we recommend calculated allocations to private assets—private equity, private commercial real estate, infrastructure, and private credit—to capture illiquidity premiums and potential manager "alpha" that comes from skill, access, and club-deal networks.
About Trajan Wealth
Trajan Wealth, LLC was founded in 2012 by CEO Jeff Junior. Before his 20+ years in the financial services profession, Jeff served in the United States Marine Corps. He continues to serve his clients and employees with service, respect, and attention to detail.
Our locations span Arizona, Colorado, Florida, Georgia, Texas, Utah, and soon Illinois. Visit https://trajanwealth.com or call 1-800-838-3079.
Disclaimer:
* Advisory services offered through Trajan® Wealth L.L.C., an SEC registered investment advisor. Legal services are offered through Trajan® Estate, L.L.C. in Arizona and Utah, and independent law firms in other states. Private Equity investments: May require accreditation.
Contact
Trajan Wealth
***@trajanwealth.com
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Source: Trajan Wealth
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