As we reflect on another rewarding year, we’re proud to share the progress we’ve made in supporting your financial journey. Your plan and portfolio remain guided by these long-term goals rather than by market predictions or economic speculation. This steadfast approach will most certainly continue in the coming year and beyond, ensuring we remain anchored in what truly matters—your financial future.
Guiding Principles
Our investment philosophy remains rooted in a disciplined, goal-focused approach:
- We are long-term, planning-driven investors, committed to investing in broadly diversified portfolios of high-quality businesses.
- We believe neither the economy nor the markets can be forecast consistently. History teaches us that the most effective way to benefit from the superior long-term returns of equities is to endure their inevitable, and always temporary, downturns.
- We do not react to short-term market events. Unless your personal goals change, our strategy remains unchanged—a foundation of patience and conviction.
Looking Back on 2024
Fueled primarily by a handful of dominant technology companies, 2024 proved to be another exceptional year for diversified equity investors. Encouragingly, towards the end of the year the market began showing signs of broadening out—with gains extending beyond the tech giants. Such a development would be a welcome boost to balanced portfolios.
The year’s political landscape offered at least one certainty: a clear and uncontested presidential election outcome. Meanwhile, the economic environment remained relatively favorable. Employment levels held firm, though the job market exhibited slight cooling due to tighter monetary policy. Corporate earnings and dividends soared to record highs, with further growth anticipated in 2025.
As valuations climbed, some market participants voiced concerns about equities getting ahead of themselves. While these observations are valid, valuations have historically proven unreliable as timing indicators. Therefore, our approach remains steady as we go: stick to the plan, tune out the noise.
Persistent Themes
Inflation—a lingering concern—continues to challenge the economic landscape. As Federal Reserve Chair Jerome Powell candidly remarked in December, inflation isn’t vanishing anytime soon. Unsurprisingly, markets responded negatively to his remarks, and rightly so. However, volatility tied to inflation is precisely the kind of temporary fluctuation long-term investors must be prepared to endure.
On the fiscal front, America’s public finances remain sobering. Yet, somewhat counterintuitively, the consumer sector is remarkably healthy. In the fourth quarter of 2024, according to JPMorgan’s “Guide to the Market’s” household debt service as a percentage of disposable income reached just 11.3%, a near 40-year low. This resilience underscores a key strength supporting continued economic activity.
Managing Expectations
It would be unreasonable to expect the equity market’s exceptional performance since the depths of the 2009 Global Financial Crisis to persist indefinitely. Annualized gains near 16% over the past 15 years are extraordinary. However, our long-term assumptions are far more conservative—in line with the S&P 500’s historical return of approximately 10%. Crucially, we do not need extraordinary returns to achieve our goals. Consistency, patience, and disciplined investing remain the cornerstones of success.
You Are Greatly Appreciated
As we embark on 2025, we extend our warmest wishes for a healthy, happy, and prosperous New Year! Your confidence and partnership mean everything to us—our clients and friends—and it is a privilege to serve you. If you have any questions or concerns, we are always here to listen and help. As always, thank you for your confidence in our firm.
Best,
Nick
Nick Enzweiler, CFP
