Welcome to this week's biweekly commentary. I'm Kelly Heppe, Financial Advisor with the Boh Heppe Group. Today, we’ll share insights from recent client meetings, starting with inflation. This has been a hot topic since 2022 when inflation first spiked, and we’re seeing indications of a second wave. Historically, inflation comes in several waves, impacting the Fed's decisions. Many predict the Fed may lower interest rates in June, but if inflation spikes, they may need to increase rates instead. We’ll be watching closely. Alex, what are you seeing?
Alex:
Thanks, Kelly. As a reminder, as fiduciaries, we are data-driven when assessing portfolios and client assets. Looking back at Q4 of last year, nine of eleven sectors outperformed earnings and sales estimates, which was great. Looking ahead, our research partners estimate a 15% earnings growth for the S&P in 2025. Time will tell how it unfolds, but we remain cautiously optimistic based on the data. Tom, over to you.
Tom:
Thank you, Alex. One topic we've discussed is the S&P 500 index chart. We're near all-time stock market highs and have started moving sideways, indicating uncertainty. We expect a market correction or pullback, which is normal. However, we haven’t experienced one for over a year and typically, these drawdowns are 10-15% over time. We expect this to happen and have discussed it widely. Our focus is on managing risk in our asset allocation so we have short-term assets for the next one to two years while also considering long-term strategies to try and stay ahead of inflation, as Kelly mentioned. You’ll hear more on this in our meetings throughout 2025.
Kelly:
Thank you, Tom, and thanks everyone for tuning in. We're excited to bring you timely topics and we will return in two weeks.
Thank you for your trust and confidence.
Tom, Kelly, Alex, Amanda, Jesus, Larry, & Rachael