The Start of the Year

Happy New Year from Perennial Wealth Advisors! 

START OF THE YEAR

In our first full year as Perennial Wealth Advisors, our goal is to keep improving your investment/financial planning experience. Each month we will produce newsletters that offer encouragement for your investment journey, friendly reminders, and financial planning questions to help you stay on track. As we begin 2025, I’ve attached a “Start of the Year” guide that includes pertinent questions regarding:

• Personal Goals
• Cash Flow
• Asset and Debt
• Insurance
• Taxes
• Estate Planning

Please take a look to see which questions pertain to your situation and consider discussing with us in your next meeting. Ideally, this will help us to be proactive and prepared for any upcoming life changes. 

MARKET UPDATE

We are happy to report a very successful year in our shared pursuit of your most cherished lifetime financial goals. Our plan and our portfolio continue to be driven by those goals, rather than by prognostication around the economy or the markets. This will continue to be the case in the coming year, and beyond. I begin by restating some of our core beliefs, and proceed to a few comments about the current economic/financial backdrop.

General Principles:

• We are long-term, goal-focused, plan-driven investors. Our core investment policy is to invest in broadly diversified portfolios of high-quality businesses.
• We believe that the economy can’t be consistently forecast, nor the markets consistently timed. We conclude from this that the only practical way to capture the premium long-term return of equities is to ride out their frequent, sometimes significant but historically always temporary declines.
• We do not react to economic or market events. As long as your long-term goals remain unchanged, so will our plan for the achievement of those goals.

Current Commentary:

• Powered largely by a very few of the very largest technology stocks, the past year was another exceptionally good one for the diversified equity investor. As the year came to a close, the market gave evidence of broadening out to some extent. That would certainly be welcome.
• The presidential election result was at least clear and uncontested. The economic backdrop continued favorable. The job market remained fairly strong, though showing signs of cooling due to relatively stringent monetary policy. Corporate earnings and dividends reached record highs, and are forecast to increase further in 2025.
• If anything, late in the year many investors feared that the equity market had gotten ahead of itself, as evidenced by somewhat stretched valuations. Since valuations have never proven to be a reliable timing tool—any more than anything else has—we encouraged clients to just keep on keeping on with their plan.
• Inflation has not gone away. Nor, as Fed Chair Powell observed in mid-December, is it going away. A frothy market took this statement rather badly, as indeed it should have, in our opinion.
• And while the fiscal condition of the United States remains undeniably appalling, the consumer is (perhaps surprisingly) in very good shape. The household debt service ratio (debt payments as a percentage of disposable personal income), at 11.3% in the fourth quarter of 2024*, is near 40-year lows.
• It doesn’t seem reasonable to suppose that the broad equity market can go on indefinitely compounding at the nearly 16% it’s been producing since the March 2009 Global Financial Crisis lows. Nor do we need it to. Our long-term plans assume the hundred-year return of the S&P 500 at around ten percent. 

Please note: We will be sending you a separate email with a PDF attached, called “Client’s Corner.” These pieces are written by Nick Murray, one of our favorite financial experts. I highly recommending reading this month’s article. 

*from page 18 of JP Morgan’s Jan. 2025 edition of “Guide to the Markets”

FRIENDLY REMINDERS

• PWA Portal – Here is a link to your PWA portal login. This portal is your one stop shop to view your accounts, balances, and quarterly statements. If you are unable to login, please let us know and we will get you set up.

We wish each of you a healthy, happy, and prosperous 2025. We’re always here to answer your questions or address your concerns. Thank you for being our clients. It is a privilege to serve you.  

On behalf of your PWA team,

Brock Hedgecoke, CFP^® 
Financial Advisor