Newsletter
WINTER 2024
TO: Clients, Friends and Associates
FROM: Swarthmore Financial Advisors, Ltd.
NEWS
WINDING DOWN:
As we reached the end of 2023, we began to wind down our activities here. We hope to have our client accounts fully transitioned over the next few weeks and will monitor the process until all client activities are fully operational. We will begin scheduling introductory meetings with Addis Hill shortly and will be in touch to determine your preference for in-person, virtual or phone meetings. Please feel free to call or e-mail us with any questions about your account during this transition period.
QUOTE OF THE DAY: "Success is doing what you love and loving what you do.” Tony Robbins
MARKET UPDATE:
After a dismal start to the fourth quarter of 2023, a market rally began in November and quelled investor fears about falling equity values. Quarterly returns were exciting, delivering 2023 equity gains which exceeded all forecasts. To the enjoyment of most investors, these results reinforced the age-old concept of “market unpredictability.” Recession fears subsided as inflation cooled and consumer spending was level. The Fed held interest rates steady in December while preparing for 3 rate cuts in 2024. With global unrest a concern and the US Presidential election later this fall, more uncertainty prevails. As always, we remind you to maintain a well-diversified portfolio and stay the course.
We leave you with our best wishes for a prosperous new year.
Benchmark performance as of December 31, 2023:
| Index | Qtr 4 | 1 Year | 5 Year | 10 Year |
|---|---|---|---|---|
| Dow Jones | 13.09% | 16.18% | 12.47% | 11.08% |
| S&P 500 | 11.69% | 26.29% | 15.69% | 12.03% |
| NASDAQ | 13.56% | 43.42% | 17.74% | 13.65% |
| MSCI-EAFE | 10.47% | 18.85% | 8.69% | 4.78% |
Newsletter
AUTUMN 2023
TO: Clients, Friends and Associates
FROM: Swarthmore Financial Advisors, Ltd.
NEWS
INCREASE IN SOCIAL SECURITY BENEFITS:
Social Security Administration recently announced that a 3.2% cost-of-living adjustment (COLA) will be applied to 2024 Social Security and Supplemental Security Income (SSI) benefits. The inflation rate, measured by the Consumer Price Index (CPI-W), is utilized each year to calculate any increase.
For beneficiaries under full retirement age and still working, the earned income limit increases to $1,860 per month, or $22,320 per year. Annual earnings in excess of this limit will result in a reduction of $1 Social Security benefits for every $2 in earnings above the limit. Upon reaching full retirement age, employees are no longer subject to benefits limitations, since no earnings test is applied. For 2024, the payroll tax rates stay unchanged, but the wage base subject to Social Security tax increases to $168,600, and the maximum benefit will now be $3,822 per month.
QUOTE OF THE DAY: “Money frees you from doing things you dislike. Since I dislike doing nearly everything, money is handy.” Groucho Marx
TOM NAMED FIVE STAR WEALTH MANAGER:
Tom has been selected as a Philadelphia Five Star Wealth Manager and will be listed in the December issue of Philadelphia Magazine. The list is compiled by surveying thousands of registered financial services professionals and companies in the Philadelphia region to evaluate industry standing and client retention rates. Only wealth managers with qualified professional education and credentials having at least five years of experience are considered.
The evaluation process and results are driven by research focusing on ten objective eligibility and evaluation criteria that are associated with providing quality service to clients. Professional conduct is also reviewed for each wealth manager to ensure that candidates are in good ethical standing with a favorable regulatory history. Less than 9% of those reviewed were selected this year. We are pleased to be included on the 2023 list, and thank all our loyal clients and associates for your continued support and confidence in our services.
VIEWS
WARNING---THE SCAMMERS ARE AT IT AGAIN:
We recently learned of a new mail scam in the form of a letter fraudulently claiming to be from the IRS. These mass mailings attempt to mislead recipients with the unfounded possibility of a tax refund and of course direct the recipient to provide several forms of identification to complete the process. We advise that you NOT respond to such mailings.
We strongly recommend that you check your credit history regularly to minimize exposure to identity theft. As you may know, consumers are entitled to a free credit report every twelve months from each of the major credit reporting companies – Experian, Equifax and TransUnion. All three reports can be requested at the same time or can be staggered throughout the year.
If you haven’t yet requested a free report, you may visit the website at www.annualcreditreport.com or call the toll-free hotline at 1-877-322-8228 to order your copy. Your report is readily available online, while telephone requests are usually processed within 15 days. If necessary, you are directed to report scams and/or frauds to the Federal Trade Commission at www.ReportFraud.ftc.gov. Your report will be shared with over 3,000 law enforcement services.
MARKET UPDATE:
Investors braced for trouble in the 3rd quarter as equities slumped across the board. September produced the biggest losses of the year. However, unlike last year, the quarterly losses did not push the year-to-date results into negative territory. While the economy continues to reflect stable growth, consumer concerns could soon slow spending, which represents 2/3 of economic activity. Lately, investors have moved to safer ground to lock in higher yields in money markets and short-term bonds. Historically, when investment funds shift from stocks to fixed income, stock prices decline.
The Fed continues to focus on inflation and appears to be leaning toward “no action” on interest rates at the next meeting. Some analysts believe that we may see one more interest rate increase in December, bur higher borrowing costs and geopolitical unrest could cause the economy to pause and further cool inflation, thereby avoiding another rate increase. Hopefully, the recession fears will subside, interest rates will be lowered and the stock market will begin to rebound. Like the Beach Boys sing, “wouldn’t it be nice”?
Best wishes for a happy and healthy holiday season.
Benchmark performance as of September 30, 2023:
| Index | Qtr 3 | YTD | 1 Year | 5 Year | 10 Year |
|---|---|---|---|---|---|
| Dow Jones | -3.39% | 12.65% | 21.01% | 9.35% | 11.28% |
| S&P 500 | -3.27% | 13.07% | 21.62% | 9.92% | 11.91% |
| NASDAQ | -4.12% | 26.30% | 25.00% | 10.44% | 13.36% |
| MSCI-EAFE | -4.11% | 7.08% | 25.65% | 3.24% | 3.82% |
Newsletter
SUMMER 2023
TO: Clients, Friends and Associates
FROM: Swarthmore Financial Advisors, Ltd.
NEWS
SCHWAB/TD AMERITRADE MERGER:
As you may have heard, the Charles Schwab discount brokerage firm completed an acquisition of TD Ameritrade, a smaller discount brokerage firm in 2020. Over the past few years, these companies have been coordinating their staffs, locations and operations to merge as Charles Schwab & Company, Inc. The target date for completion of this project is Labor Day weekend, a few weeks from now.
If you are a current account holder at Schwab, we understand that your account will remain intact, carrying the same account number and personal passwords you may have established. In most cases, no new paperwork will be required and no personal investments will be affected. Trading, distributions and other investment activities are projected to be uninterrupted as the operations merger is completed.
Schwab security measures have been enhanced to protect the safety of your personal information on the website and mobile applications. We will closely monitor the merger progress and welcome you to contact us if any account issues arise over the next few months.
QUOTE OF THE DAY: "Wall Street has a few prudent principles; the trouble is that they are always forgotten when they are most needed." Benjamin Graham
PRIVACY NOTICE:
As required by both SEC and FTC Privacy Regulations, we are enclosing our current Privacy Policy for your records. Annually, we will provide a copy to all existing clients and will notify you timely if any modifications or revisions are implemented.
VIEWS
FEDERAL DEBT IS CLIMBING RAPIDLY:
The national debt has grown to $32 trillion. Each day we spend $2 billion on interest alone, double the amount we spent a few years ago. Polls show that most Americans are concerned that high levels of debt requiring high interest payments could impair future economic growth and limit our abilities to address priorities such as defense, infrastructure, healthcare and education. Citizens also fear that this predicament could adversely affect the quality of life for future generations.
To learn more about this troubling topic, we recommend visiting the website of the Peter G. Peterson Foundation at www.pgpf.org. Established in 2008, this non-partisan organization is dedicated to addressing America’s long-term fiscal challenges to provide a secure economic future. A recent article on their website indicated our national debt now exceeds the combined values of the China, Japan, Germany and United Kingdom economies. The article also pointed out that the total debt breaks out to $244,000 per household, or $96,000 per person! They conclude that “we’re not investing enough in our future.” The intent to restore America’s fiscal stability is clear, but the solutions might be hard to swallow.
MARKET UPDATE:
For the second quarter of 2023, stock indexes continued to grow in value to the delight of equity investors. Equities have risen 20% from last October’s lows. However, we note that 7 stocks accounted for about 75% of the market gain. Can you guess them? (See answer below). The technology sector dominated the quarter and large growth stocks pulled ahead of value stocks. Energy stocks and utilities lagged but small-cap stocks began to rally as the quarter came to a close. Foreign stocks continued to grow, with the exception of China. Bond yields remain attractive, but bond values suffer as rates increase.
The Fed took no action in June but is expected to raise interest rates again this month as inflation softens but remains a concern. Analysts do not expect further increases this year, but rate cuts are not expected until sometime next year. Some economists anticipate an economic slowdown in the 3rd or 4th quarter, due to a drop-off in consumer spending. We hear about a “rolling recession” where some sectors are up and other are down, but the general economy would produce some growth. As inflation levels off and interest rates are reduced, we may see our way clear to a soft landing next year. Stay tuned!
Quiz answer: Apple, Microsoft, Amazon, Tesla, Nvidia, Meta and Alphabet
Benchmark performance as of June 30, 2023:
| Index | Qtr 2 | 1 Year | 5 Year | 10 Year |
|---|---|---|---|---|
| Dow Jones | 11.94% | 26.08% | 12.03% | 12.43% |
| S&P 500 | 8.74% | 19.59% | 12.31% | 12.86% |
| NASDAQ | 12.81% | 25.02% | 12.92% | 15.02% |
| MSCI-EAFE | 2.95% | 18.77% | 4.39% | 5.41% |
Newsletter
SPRING 2023
NEWS
FDIC AND SIPC:
With the recent turmoil caused by West Coast banks, we have fielded some questions and concerns about insurance protection of investments. We now take a moment to review the most common forms of protection: Federal Deposit Insurance Corporation (FDIC) and Securities Investor Protection Corporation (SIPC).
FDIC, established in 1933, provides up to $250,000 insurance for bank checking and savings accounts, money market accounts and certificates of deposits (CDs) for FDIC-insured banks and financial institutions. Each depositor is covered up to the $250,000 limit based on ownership – individual or joint. Note that in the case of joint ownership, each owner is covered up to the $250,000 limit. FDIC does not cover stocks, bonds or mutual fund holdings. For more information, visit www.fdic.gov/deposit/deposits, or call the hotline at 1-877-ASK-FDIC (1-877-275-3342).
SIPC, created by Congress in 1970, protects the investors’ securities and cash of each SIPC-member firm. In the event of a brokerage failure, investors must file a claim in a timely manner to qualify for up to $500,000, which includes up to $250,000 for cash in the account. Some firms may carry SIPC protection in excess of the basic amount. SIPC does not protect investments of a non-SIPC firm, nor does it cover market losses or promises of investment performance. For more information, visit www.sipc.org , or call 1-202-371-8300.
QUOTE OF THE DAY: “The art of taxation consists of plucking the goose so as to get the most feathers with the least hissing.” Jean-Baptiste Colbert,
French Finance Minister to King Louis XIV
FINANCIAL LITERACY:
Since 2005, Congress has recognized April as Financial Literacy Month, with the commonly-stated goal of promoting the ability to effectively use financial skills for personal financial management, investing, and budgeting. Some progress has been made in developing courses to educate students of all ages and we support more attempts to mandate financial literacy.
While young people have been the main recipients of these programs, many surveys reflect the lack of basic financial skills in adults. Studies continue to report unprecedented increases in credit card debt, with many families living paycheck to paycheck. Another report released by Econsult Solutions projects that a sizable percentage of PA’s aging population will encounter financial shortfalls in their later years, due to insufficient retirement savings.
Recently, Fidelity Investments published a study on The Next Generation and noted that over $70 trillion is expected to be transferred to younger generations in the next 20 years. In light of government deficit spending and dwindling Social Security funds, we find this information alarming and we strongly support financial education of our youth to develop these oncoming responsibilities.
MARKET UPDATE:
Coming off a 4th quarter with positive equities performance, investors were pleased with 1st quarter gains in stocks. The year-end inflation rate was at its lowest in over a year, and equity markets started the new year on a positive note. However, inflation then began to heat up and the equities momentum slowed. Trouble in the banking sector raised investors’ concerns, but. quick action by the Federal Reserve limited the fallout from some bank failures. Technology stocks led the pack while financial stocks slipped, but many investors ran to safer ground, causing a temporary run on cash. Globally, stocks and bonds produced gains for the quarter but the inflation data remained in the Fed’s crosshairs as many analysts continue to expect some degree of a recession this year.
The Fed will meet again in May and most experts anticipate one more small interest rate increase. While the cumulative money tightening has cooled inflation, the cost of borrowing has also slowed economic growth, which is expected to struggle for the remainder of the year. So should investors remain in stock positions at this time? Our approach stresses longer holding periods void of market timing. The attached charts reflect the probability of positive results, so we advise staying invested and maintaining a balanced blend.
Benchmark performance as of March 31, 2023:
| Index | Qtr 1 | 1 Year | 5 Year | 10 Year |
|---|---|---|---|---|
| Dow Jones | 0.77% | -2.60% | 8.30% | 10.38% |
| S&P 500 | 7.50% | -7.73% | 11.19% | 12.24% |
| NASDAQ | 16.77% | -14.05% | 11.59% | 14.10% |
| MSCI-EAFE | 8.62% | -0.86 | 4.03% | 5.50% |