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Author: Minich MacGregor Wealth Management

Tending a garden

Tariffs, Fear, and the Investor’s Dilemma: The Right Questions to Ask

Written by Minich MacGregor Wealth Management on . Posted in Posts.

The tariff-related questions that investors should be asking

“What should we do about tariffs?” It’s a question we’ve heard a lot lately, often with a note of fear in the voice of whoever is asking it. In this message, we want to answer that question. We also want to talk a little about fear, how we handle it…and how we can benefit from it.

If you’ve been following the financial news at all, you know that a feeling of anxiety has dominated the markets for the past month or so. But in the last few days, that anxiety has turned into fear. You see, on March 4, a 25% tariff on Canadian and Mexican imports went into effect.1 This requires U.S. companies that purchase goods from these countries to pay a 25% tax. At the same time, President Trump also imposed an additional 10% tariff on Chinese goods on top of the original 10% duty that began last month.1 As expected, all three countries have retaliated with their own tariffs on U.S. goods. That means the U.S. is now officially in a trade war.

The markets have not reacted to this news well. On March 4 alone, the Dow plunged over 600 points.2 The NASDAQ has been creeping closer to correction territory since late February.

When fear strikes, investors often start asking themselves the following questions:

Are the markets going into a correction?
Will the economy go into a recession?
Should I change my allocation?
Is it time to get out and move everything to cash?

You can probably hear them around the water cooler at work. You can see them online. They’re questions we frequently get from acquaintances of ours. But they are not the questions investors should be asking.

To be clear, tariffs — especially at these levels — are not a small thing. While they can be used to generate revenue or bring countries to the negotiating table, they also can increase business expenses and cut into corporate profits. When this happens, many companies will pass on these costs to regular people like you and me in the form of higher prices.

In other words, tariffs can be inflationary, at a time when we are still dealing with higher-than-normal inflation.

Investors know all this. What investors don’t know is how long these tariffs will last, how high they will go, or how big of an economic impact they will have. We don’t know whether they will trigger a major downturn in the markets. We can make reasonable assumptions and educated guesses, but we don’t know for sure. And that uncertainty, more than anything else, is why the markets have been so volatile lately. As the author H.P. Lovecraft once put it, “The oldest and strongest kind of fear is always the fear of the unknown.”

When fear grips the markets, many investors feel an intense urge to do something. After all, it seems so natural: When you know it might rain, you pack an umbrella. When you know you’ll have to drive in rush hour, you give yourself more time to reach your destination. As human beings, we always want to avoid the possibility of future pain. And since volatility can be painful, many investors start asking themselves: Should I change what I’m doing? Should I get out of the markets? The thinking is that if they can somehow avoid market turmoil, they can then get back in later when things are calm. Like skipping the freeway and taking service streets until you’re past the traffic jam.

But there’s a major problem with applying these metaphors to investing: They are short-term solutions for short-term problems. Investing, on the other hand, is for the long-term…and one of the biggest mistakes in investing is making a short-term decision that has long-term consequences. This is true in life as well. It’s why we pack an umbrella when it looks like rain, but we don’t move to another state. It’s why we may try to avoid driving when there’s heavy traffic, but we don’t sell our car.

That’s why a better metaphor for investing is planting a garden. With a garden, we don’t decide to uproot all our tomato plants and switch to squash after a month. We don’t put everything into pots because we hear distant thunder and know it might hail. We don’t overwater our plants just because we feel the need to constantly do something to help them grow. Instead, we choose the best possible soil. We plant with care. We water only when necessary. We harvest when things are ripe. And while we know the zucchinis might sometimes do better than the peppers, or the rosemary plant might fail, we always patiently give the seeds still in the ground all the time they need to sprout.

When volatility strikes, when fear and uncertainty dominate, we must always remember to treat our investments like a garden. Volatility, whatever the cause, is a short-term problem. Just as we want our garden to bear fruit for years, not months, it’s crucial that we make no short-term move that could harm our long-term plan.

Here’s how Peter Lynch, one of the most successful investors of all time, explains it: 

“A market calamity is different from a meteorological calamity. Since we’ve learned to take action to protect ourselves from snowstorms and hurricanes, it’s only natural that we would try to prepare ourselves for corrections. [But] far more money has been lost by investors preparing for corrections or trying to anticipate corrections than has been lost in corrections themselves. Skittish investors, fearing the correction is imminent, sell…their stocks and stock mutual funds. Or they put off buying stocks in companies they like and sit on their cash, waiting for the crash. But once the market reaches bottom, the cash sitters are likely to continue to sit on their cash. They’re waiting for further declines that never come, and they miss the rebound. They may still call themselves long-term investors, but they’re not. They’ve turned themselves into market timers, and unless their timing is very good, the market will run away from them.”3

For these reasons, here are the questions investors should be asking themselves:

  1. If I get out of the market now, how will I know when it’s time to get back in?
  2. Would I rather miss a correction that could last for a few months, or a rebound that could last for years?
  3. If I own investments I like, would I really want to sell them and risk buying them back at a higher price later?

To be clear, tariffs are an important story, and one that will quite possibly be with us for a long time. And market volatility is painful, make no mistake about that. But while we here at Minich MacGregor Wealth Management don’t welcome volatility, we don’t fear it, either. That’s because we know it’s an opportunity. An opportunity to be even more patient, even more disciplined, even more consistent than before. And it’s those qualities — patience, discipline, consistency — that make the most difference in the long run.

Blaise Pascal, the great mathematician and philosopher, once said, “All of humanity’s problems stem from man’s inability to sit quietly in a room alone.” We think there’s a lot of wisdom in that! So, while we will continue keeping a close eye on the markets — and while we will certainly send you more information in the future on tariffs and their effects — what matters most is this: We cannot do anything about tariffs, or how the markets react to them.

But we can do something about ourselves.

We can be gardeners.

So, as spring rolls in, as the flowers bloom and the trees begin to blossom, take this opportunity to focus on whatever garden you may grow at home. And know that as you do, our team is constantly tending the one you’ve entrusted us with. It’s a garden we intend to last a lifetime.

1 “Trump puts tariffs on thousands of goods from Canada and Mexico,” CNBC, https://www.nbcnews.com/politics/economics/trump-puts-tariffs-thousands-goods-canada-mexico-risking-higher-prices-rcna194542
2 “Dow tumbles again, loses more than 1,300 points in two days,” CNBC, https://www.cnbc.com/2025/03/03/stock-market-today-live-updates.html
3 “From the Archives: Fear of Crashing,” Worth.com, https://worth.com/from-the-archives-fear-of-crashing/

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Types of Stock

Questions You Were Afraid to Ask #16

Written by Minich MacGregor Wealth Management on . Posted in Posts.

The only bad question is the one left unasked. That’s the premise behind many of our posts. Each covers a different investment-related question that many people have but are afraid to ask.

In recent posts, we’ve been breaking down some of the more common bits of financial jargon that you are likely to hear in the media about the stock market.  In this message, let’s look at: 

Questions You Were Afraid to Ask #16:
What do terms like blue-chip, value, and growth stocks mean?

If you ever tune into the financial media, you’re likely to encounter terms for different types of stocks.  Blue-chip is a frequent one; so are value and growth.  But what do these terms mean? 

Terms like these are a kind of shorthand description of a stock’s size, history, or risk profile.   With a single word, experienced investors can learn a lot about a company’s size, potential, and risks.  And since every investor has different goals to consider when selecting their investments, some may choose to focus on one type of stock over another.   

Let’s break down each term so you know what they mean if you ever hear them mentioned. 

Blue-Chip Stocks. This term refers to stocks from large, financially stable companies with good reputations.  (The name comes from high-valued chips in poker, which are often blue in color.) 

Typically, these companies have a sizeable market capitalization. (As you may remember from my last “Questions” letter, this is the total market value of a company’s available shares of stock.)  Blue-chip stocks are often household names that everyone would recognize.  If you look at the credit card in your wallet, the soda in your fridge, or the labels in your medicine cabinet, you will likely see examples of blue-chip companies. 

Investors often prefer blue chip stocks for a variety of reasons.  First, because these companies are well-established, they are often seen as less volatile.  While not guaranteed, blue chip companies tend to last for decades and can often weather recessions. 

Another reason many investors like blue chip companies is because they often pay regular dividends.  A dividend is when a company pays a percentage of their profits to shareholders, usually on a quarterly basis.  These dividends can either be reinvested or used as a source of income. 

Value Stocks. Imagine there were two fine dining restaurants in your area.  One is famous— the kind of place that gets mentioned in travel guides and where people go to propose.  The other, located a few blocks away, is a tiny spot that hardly anyone knows about.  But it tastes just as good as the touristy place, and best of all, it’s so much cheaper.  So, you decide to go there more often than not, aiming to enjoy it for as long as you can before the word gets out. 

Value stocks are similar.  The term refers to companies that appear to be undervalued — meaning they are trading at a lower price than they’re potentially worth.  Investors looking for value usually focus on companies with experienced leadership, steady revenue, a strong competitive advantage, and a low share price relative to their earnings.

Value stocks aren’t always easy to find, and the very concept of “value” is a subjective one.  But the idea is to find companies that could give you great bang for your buck and the potential for long-term growth.  Because, like that neighborhood restaurant, once the word gets out and the stock gets more popular, it could rise significantly in price. Of course, the risk of a value stock is that it could stay “undervalued” for a long time.

Growth Stocks. This term refers to stocks that have the potential to skyrocket in price over time.  Often, growth stocks are younger companies seeking to set new trends or shake up an industry.  These companies focus on growing rapidly and reinvest their earnings entirely into expansion.  Since technology is constantly changing, many investors look to up-and-coming tech companies for growth stocks, hoping to score the “next” Apple or Microsoft. 

But with this potential for growth comes the potential for more volatility.  Growth companies are often much riskier than value or blue-chip stocks, because they are younger, unproven, and have less stable finances.  For every growth company that succeeds and matures, there may be a handful that fail and disappear.

As you can see, each of these types have their own pros and cons. Blue chips tend to be reliable, stable, and often pay dividends — but they can be expensive and their potential for growth may be limited.  Value stocks have the potential to grow, and are typically not as risky as growth stocks, but may be hard to find.  Growth stocks could have the highest upside, but also the most risk and volatility.  For these reasons, many investors often seek to diversify by holding all three types, depending on their specific needs and goals. 

In our next post, we will look at a few other terms you’ll often hear in the media: Dividends, buybacks, and stock splits.  Until next time! 

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Whitehouse image

Presidents’ Day and the Power of Unity

Written by Minich MacGregor Wealth Management on . Posted in Uncategorized.

On the morning of January 20, 1993, President George H.W. Bush sat down at his desk in the Oval Office for the last time. Since he had failed to win reelection to a second term, he was preparing to attend the inauguration of his successor, Bill Clinton. But before he left the White House, he decided to pen a note to the man who would shortly replace him.

When Clinton took office that afternoon, he found the note waiting for him.1 This is what it said:

Dear Bill,

When I walked into this office just now, I felt the same sense of wonder and respect that I felt four years ago. I know you will feel that, too.

I wish you great happiness here. I never felt the loneliness some Presidents have described.

There will be very tough times, made even more difficult by criticism you may not think is fair. I’m not a very good one to give advice; but just don’t let the critics discourage you or push you off course.

You will be our President when you read this note. I wish you well. I wish your family well.

Your success now is our country’s success. I am rooting hard for you.

Good luck —

George

We’ve been thinking about this letter as we approach Presidents’ Day. As you know, this holiday, which began as a way to celebrate the birthdays of Washington and Lincoln, has since become a celebration of all those who have served in our nation’s highest office.

We think it’s remarkable that Bush would take the time to write such a kind and thoughtful message to the man who had defeated him. He could very easily have said nothing. People would have understood. It also would have been easy to leave something nasty, sarcastic, or passive-aggressive. After all, Bush and Clinton were technically rivals. That would have been an unfortunate — but also very human — response.

But President Bush did not do those things.

Though he didn’t have to, though it wasn’t required of him, he thought it important to make the new president feel, as Clinton himself later said, “as much at home as he could.”2 He decided to emphasize unity, respect, and goodwill over bitterness.

And that, to us, is the whole point of a day like Presidents’ Day.

As you know, there have been forty-five different presidents in our country’s history, across forty-seven presidencies. (Presidents Cleveland and Trump served/are serving non-consecutive terms.) These men were all very different, with different philosophies, styles, beliefs, opinions, and ambitions. That makes sense, because we are and have always been a country made up of different philosophies, beliefs, opinions, and ambitions.

But no matter our differences, all those presidents — and all of us — still have two things in common: A shared love for our country…and a mutual benefit whenever we place unity, respect, and goodwill above our differences.

President Bush’s letter established a tradition of leaving a note for the next commander-in-chief.3 As chance would have it, each president’s note has been to a member of the opposing party. Bush to Clinton, Clinton to Bush. Bush to Obama, Obama to Trump. Trump to Biden and back again. None of these men, it is fair to say, agreed very much with each other. But each chose to continue the tradition. Each chose to stress unity and goodwill over bitterness.

Our country is strongest when we emphasize these values. When we remember that even those who disagree can still show respect for one another.

While it’s not as important as Independence Day, or as hallowed as Memorial Day, we think this holiday is still a wonderful opportunity to exercise our patriotism…and to remember that what unites us will always be more powerful than what divides us. To paraphrase President Bush, the more each of us succeeds, the more we all succeed. And the harder we root for each other, the better off we all will be.

On behalf of everyone at Minich MacGregor Wealth Management, we wish you a happy Presidents’ Day.

1 “Note from President George H.W. Bush to President Bill Clinton,” Clinton Digital Library, https://clinton.presidentiallibraries.us/items/show/101724
2 “The letter George H.W. Bush left for Clinton is a lesson in grace,” CNN, December 1, 2018. https://www.cnn.com/2018/12/01/politics/george-bush-bill-clinton-letter-trnd/index.html
3 “Letters left by U.S. presidents to their successors,” Ballotpedia, https://ballotpedia.org/Letters_left_by_U.S._presidents_to_their_successors

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Tax image

Important Updates for the 2024 Tax Year & When 1099s Will be Available

Written by Minich MacGregor Wealth Management on . Posted in Uncategorized.

A new year means new tax changes.  While Congress didn’t pass any major tax reform last year, some tax provisions have been updated that could affect how much money you keep and how much goes to Uncle Sam. 

Here, we’ve included some of the most significant changes for investors and retirees.  Please note that these changes relate to your filing for the 2024 tax year.  Our suggestion: Look over the material below and circle anything you have questions about.  Then, feel free to share this letter with your tax professional!  They should be able to answer any questions you have.  Of course, our team is also available to help in any way we can.

We understand that tax season can be stressful, so we want to make this process as smooth as possible for you.  Schwab issues Form 1099 Composite in three phases, with most forms available in mid to late February. You can access your tax documents as they become available by logging into Schwab Alliance using your User ID and password.  If you have not opted for paperless delivery, your tax documents will be mailed to you.

To help reduce the stress of tax season, feel free to have your accountant or tax preparer contact us directly for any investment information needed.  We are always happy to coordinate with other professionals you work with to minimize your workload. 

As always, if there’s anything our team can do to be of assistance, please let us know.  Have a great week!

Important Updates for the 2024 Tax Year

Changes to Federal Tax Brackets1

As it often does, the IRS has adjusted the 2024 tax brackets based on inflation.  These adjustments are smaller than in 2023, as inflation has slowed considerably.  Thus, while tax rates have not changed, bracket ranges increased by about 5.4%.2 

The brackets for the 2024 tax year are as follows:

Tax RateSingleMarried, filing jointlyHead of Household
10%0 to $11,6000 to $23,2000 to $16,550
12%$11,601 to $47,150$23,201 to $94,300$16,551 to $63,100
22%$47,151 to $100,525$94,301 to $201,050$63,101 to $100,500
24%$100,526 to $191,950$201,051 to $383,900$100,501 to $191,950
32%$191,951 to $243,725$383,901 to $487,450$191,951 to $243,700
35%$243,726 to $609,350$487,451 to $731,200$243,701 to $609,350
37%$609,350 and up$731,200 and up$609,350 and up

Changes to Capital Gains3

The income threshold for long-term capital gains rates has also gone up. 

Tax RateSingleMarried, filing jointlyHead of Household
0%0 to $47,0250 to $94,0500 to $63,000
15%$47,026 to $518,900$94,051 to $583,750$63,001 to $551,350
20%$518,900 and up$583,750 and up$551,350 and up

Changes to Deductions4

As you know, when you file your taxes, you can either claim a standard deduction or dive into the details and itemize your deductions.  (Since the passing of the Tax Cuts and Jobs Act back in 2017, most people choose the former.)  Per the IRS, the standard deduction is “a specific dollar amount that reduces the amount of income on which you’ve been taxed.”5

Due to inflation, the IRS has also increased the standard deduction for your 2024 taxes.  For singles, the standard deduction is now $14,600, up from $13,850.  For married couples filing jointly, it is $29,200, up from $27,700.  For heads of households, the standard deduction is $21,900, up from $20,800. Remember, you can’t take the standard deduction if you also itemize deductions.  And for married couples filing separately, both spouses must take the same type of deduction. So, if one spouse chooses to itemize, the other spouse must as well.

Changes to Alternative Minimum Tax (AMT) Exemption Levels4

When Congress passed the Tax Cuts and Jobs Act back in 2017, the number of Americans who owe the AMT has been drastically reduced.  But in case you fall under this category, the exemption levels for 2024 are as follows:

SingleMarried, filing jointly
0 to $85,7000 to $133,300

These exemption levels begin to phase out at $609,350 for single individuals and $1,218,700 for married couples filing jointly. 

***

We hope you found this information helpful.  Obviously, it’s not a completely exhaustive list of every change for the 2024 tax year.  But it is an overview of some of the most important ones.  If you have any questions or concerns, please let us know.

Sources
1 “Federal income tax rates and brackets,” Internal Revenue Service, https://www.irs.gov/filing/federal-income-tax-rates-and-brackets
2 “Tax brackets for 2024 (for taxes due in 2025),” CNBC, https://www.cnbc.com/select/federal-income-tax-brackets-tax-rates/
3 “Capital gains and losses,” Internal Revenue Service, https://www.irs.gov/taxtopics/tc409
4 “IRS provides tax inflation adjustment for tax year 2024,” Internal Revenue Service, https://www.irs.gov/newsroom/irs-provides-tax-inflation-adjustments-for-tax-year-2024
5 “Standard Deduction,” Internal Revenue Service, https://www.irs.gov/taxtopics/tc551

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MLK Memorial

Honoring Dr. King’s Legacy: Inspiring Words for Today and Every Day

Written by Minich MacGregor Wealth Management on . Posted in Articles, Posts.

Happy Martin Luther King Jr. Day!

Dr. King’s words have always been a source of inspiration to many. Even though they were written decades ago, they continue to resonate deeply and remind us of the power we all have to make the world a better place.

One of Dr. King’s most impactful writings, Letter from Birmingham Jail, was penned in 1963 while he was imprisoned for participating in nonviolent protests against segregation in Birmingham, Alabama. In the letter, King responds to criticisms from local clergymen who called his actions “unwise and untimely.” Rather than retreating, Dr. King used the opportunity to explain why he felt it was not only necessary but urgent to fight for justice. Though his words were shaped by the challenges of his time, they still hold incredible relevance today.

This year, as we honor Dr. King’s legacy, we took some time to revisit this powerful letter. It’s not an easy read. It’s a letter born of frustration, written in the face of incredible injustice. But it’s also a letter filled with hope, resilience, and a call to action that still rings true today.

There were a few quotes that stopped us in our tracks as we read, and we wanted to share them with you—not just for what they meant then, but for what they can mean to us now.

“Any law that uplifts human personality is just. Any law that degrades human personality is injust. Segregation…substitutes an “I it” relationship for an “I thou” relationship and ends up relegating persons to the status of things.”

This line reminded us of how easy it can be to lose sight of someone’s humanity. It’s something we see every day, whether in the rush of our busy lives or in moments of conflict and misunderstanding. Dr. King’s words challenge us to slow down, to really see the people around us—not just as roles or labels, but as individuals with their own stories, struggles, and dreams. Small acts of kindness, even something as simple as a smile or a kind word, can remind someone (and ourselves) of that shared humanity.

“Injustice anywhere is a threat to justice everywhere. Whatever affects one directly affects all indirectly.”

This is such a powerful reminder of how connected we are. When someone in our community is struggling, it isn’t just their burden—it’s something that ripples out and affects us all. But the same is true of hope and kindness. When we choose to lift each other up, those small actions can grow into something much bigger. They create a ripple effect that brings us all closer together and makes our communities stronger.

“So the question is not whether we will be extremists, but what kind of extremists we will be. Will we be extremists for hate or for love?  Will we be extremists for the perseveration of injustice or for the extension of justice?”

This quote makes us pause and reflect on the importance of taking a stand for our values. Dr. King wasn’t advocating for division or conflict; he was challenging us to think deeply about what matters most to us. It’s easy to stay neutral, to avoid uncomfortable conversations or hard decisions—but there are moments when silence isn’t an option. Whether it’s standing up for fairness, supporting a friend, or choosing kindness in the face of disagreement, we all have the power to leave a meaningful impact through the principles we choose to uphold.

As we reflect on these quotes, we’re struck by how relevant Dr. King’s words remain. They inspire us to approach the world with more compassion, to act with intention, and to believe that even small, everyday choices can make a difference.

On this Martin Luther King Jr. Day, we hope his teachings inspire you as much as they inspire us. Let’s honor his legacy by carrying forward his ideals—not just today, but every day. Let’s find ways to connect, to uplift, and to act with the courage and love he so powerfully demonstrated.

On behalf of everyone here at Minich MacGregor Wealth Management, we wish you a meaningful and reflective day. May Dr. King’s vision inspire us all to keep building a brighter future together.

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Smishing Texts

Urgent Alert: Beware of Smishing Text Scams Targeting Schwab Clients

Written by Minich MacGregor Wealth Management on . Posted in Uncategorized.

Smishing Threat Campaign

Schwab has alerted us that there is an active phishing text campaign in which clients receive a text message from an international number and it mentions a disbursement from the client’s account. It then asks to click on a link to log into their account to verify the transaction.  

  • The texts are coming from different international phone numbers.
  • The texts notify that an ACH was debited from their Schwab account, typically in the thousands of dollars.
  • The text then instructs the client to cancel the disbursement if they did not request it, by replying “Y” and clicking on the link provided.
  • The link’s URL is a variation of a spoofed Schwab domain For example https://schwbba.com, https://schwabd.com, https://schwbab.com, etc. 

Be aware:

  • Schwab does not notify client about completed transaction via text message.
  • Schwab does not send out text messages from international numbers.

Keep in mind: Unlike many other attacks, smishing isn’t necessarily an indication that the client has been compromised—the attackers send a message to a large number of randomly chosen phone numbers, hoping some of those people will respond. 

Steps to follow if you suspect smishing:

  • Take a screenshot of the text and forward it on to phishing@schwab.com (Make sure the phone number is visible).
  • Delete the text message.
  • We strongly encourage you to add security measures on your Schwab accounts, such as two-factor authentication and verbal password. 
  • Report suspicious or fraudulent activity in your accounts as soon as possible, including if you entered your Schwab credentials into a fake website.

Note: If you have clicked on the phishing link, you should run an anti-virus and anti-malware scan on your device.

Remember:

  • Do not click on links or attachments included in a text message. 
  • Slow down if a message is urgent. Urgent account updates and limited time offers are red flags of possible smishing. Remain skeptical and proceed with caution. 
  • Avoid using links or contact information from the message. Go directly to the official channels/websites.
  • Double check the phone number. International numbers or odd looking numbers, such as 4-digit phone numbers, are tactics that scammers use to mask their true phone number. 
  • Do not enter your Schwab credentials or other personal information via an unverified link. Instead, enter the address you are familiar with directly into your browser to visit the trusted website to log in as usual. 
  • Double check that the URL is not a subtle variation of the real one.
  • Do not call phone numbers received through unsolicited messages. Always use a verified number that you have used in the past or is found on your account statement.

We are here to help.  Please feel free to reach out to us if you have any questions.

Visit our Cybersecurity page to learn valuable tips on safeguarding yourself and your finances from hackers, scammers, and identity theft.

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2024 Year in Review image

2024 Year in Review: Lessons Learned & Navigating Uncertainty in Investing

Written by Minich MacGregor Wealth Management on . Posted in Featured, News, Posts, Uncategorized.

Every January, we here at Minich MacGregor Wealth Management look back on the year that was. What were the highlights? What were the “lowlights”? What events will we remember? Most importantly, what did we learn? Then, we send a Year in Review message to our clients that encapsulates it all. We thought you might be interested in seeing it this year, too.

When we ponder the last twelve months, the theme of 2024, to us, is the importance of being able to operate under uncertainty. Here’s what we mean.

When the year began, there were several question marks hanging over the economy, the markets, and the nation as a whole. Each question mark, on its own, was important. Putting them all together made it extremely difficult for investors to know how the year would play out, which way the markets would go, or how the economic climate would evolve. In other words, there was a great deal of uncertainty. Let’s go through a few of the most important question marks one by one.

Which Way Will Inflation Go? The New Year kicked off with a positive outlook. Consumer prices had fallen significantly toward the end of 2023, and the expectation was that the trend would continue. But inflation rarely moves in a straight line. The inflation rate hovered around 3.1% in January, but by March, it was back to 3.5%.1  Inflation, it seemed, was still “sticky.”

This wasn’t pleasant news for the markets, because it dashed any hope that the Federal Reserve would cut interest rates in the spring. And the longer interest rates remained elevated, the more people worried about the possibility of a recession. As a result, the markets experienced a short-but-sharp dip in April.2 

Fortunately, the angst was short-lived. Over the next six months, inflation fell to 2.4% — the lowest since February of 2021, and awfully close to the Fed’s goal of 2%.1  That led to a long-awaited event in September, when we finally got some clarity on the second question mark:             

When Will Interest Rates Start to Come Down? Interest rates — the Fed’s primary tool for combatting inflation — began the year at 5.3%.3  That was the highest they’d been since early 2001. But while higher rates are effective at bringing prices down, the reason is because they cool down the economy. But if rates remain too high for too long, that coolant can ice over — and freeze the economy with it. Because of this, and because lower rates tend to juice the stock market, investors had been waiting with bated breath for any signs that rates were on the verge of coming down. Finally, in September, it happened: The Fed announced the first rate cut. Another one followed in October, and a third in November. By the end of the year, rates were down to 4.6%.3  That’s still historically elevated, but it’s a step in the right direction. That’s because we were also getting a positive answer to the third question mark:

Will the Economy Grow, or Slow? Predicting a recession has become something of a parlor game for economists. It’s not hard to understand why. Historically, raising rates to pull down inflation has almost always led to a recession. It’s called a hard landing, and it happens when prices come down so much that most businesses experience a major drop in revenue, causing them to lay off workers. Since unemployed people tend to spend less money, the economy contracts and enters a recession.

Despite years of dire predictions, this worst-case scenario never came true. Our gross domestic product, which measures our country’s total economic activity in a given period, grew by 1.6% in the first quarter, 3% in the second, and 3.1% in the third.4  As of this writing, we don’t have firm data for Q4 yet, but it’s estimated to be around the same.5 

Against all odds, for now, it seems we’ve achieved something rare: A soft landing.  

What About the Election? The fourth question mark was perhaps the least important as far as the markets were concerned, but it was also the one that got the most headlines: The November election.

Elections always create uncertainty, of course. Who will our next president be? What policies will they enact? How will they help or hurt my personal situation? History suggests that it doesn’t really matter which party controls Washington as far as the markets are concerned, but despite that, we do often see volatility leading up to the election itself. But that didn’t really happen this year. Other than a slight, brief dip at the very end of October, there was not a lot of volatility before the election, nor right after.6  Which brings us to our final question mark:

How Will the Markets React to All This? For investors, this was the biggest question mark of all. It’s always the biggest question mark of all. How would the markets react to the roller coaster of inflation? How would they react if it took longer for interest rates to drop? What about the election?

Well, now we know the answer to that, too. The S&P rose over 23% for 2024.7  When you couple that with the 24% gain we saw in 2023, it’s the best two-year performance in the index since 1997-98. The Dow, meanwhile, gained nearly 13%, and the NASDAQ over 28%.7   

Because we are looking back, because we know the answers to all these questions, it’s hard to remember the uncertainty that crept up at different points in the year. Nevertheless, uncertainty existed — and the investors who could handle it, benefited. The ones who could not, did not. We’re very happy to say that our clients belonged to the first group, but we know many people who didn’t.

Throughout the year, especially early on, we would often hear acquaintances of ours say things like, “I’m not getting into the markets until after the election.” Or “I’ll wait until interest rates come down to make a decision.” “Inflation is still too high for me, so I’ll think about it next year,” also popped up from time to time. In other words, many investors find it difficult to operate under uncertainty. Any question mark causes them to defer decisions and delay actions. Uncertainty can cause people to shut down, circle the wagons, and “turtle up.” As a result, two things happen:

  1. They miss out on the kind of year we just experienced in the markets.
  2. They don’t move forward to their financial goals.

Uncertainty is a fact of life, and as investors, we will always be dealing with question marks. Some years, there are more question marks than others, and that can certainly make things stressful. Of course, when we’re faced with uncertainty, it’s always good to slow down, take our time, and consider our options carefully. But it’s not good to become stagnant, hesitant, or fearful. It’s never good to procrastinate.  

Scientists have often held that one of the hallmarks of intelligence is the ability to make judgments under uncertainty. The ability to plan ahead even with limited information, and then adjust your plan as you learn. This is something that our team strives to do every day for our clients. We consider what we know and what we don’t. We try to identify possible outcomes and events, not to predict which will happen — which is impossible — but to prepare for as many as we can. From there, we determine what choices must be made now, which choices can be made now, and which should not be made now. Finally, we review the options that come with each choice, and which work best for each client based on their specific goals, needs, and situation.

It doesn’t mean everything will always go the way we want it to. It doesn’t mean we won’t occasionally experience setbacks. It does allow us to operate under uncertainty…which means we can always help our clients continue to work towards their dreams and financial goals.     

That’s what financial planning is all about. And that, to us, is the lesson to take from 2024.

Of course, there will be question marks in 2025, too. Here are just a few:

  • Is the inflation roller coaster truly over? Consumer prices ticked back to 2.6% in November, and there are some indications that they may rise higher still in the coming months.
  • President-elect Trump has promised to levy across-the-board tariffs against China and many other countries. What effect will those tariffs have on the economy, especially inflation?   
  • Will interest rates continue to fall, or will they remain where they are for a while? In its most recent statement, the Fed projected only two cuts for 2025.8 
  • Much of the market’s performance over the last two years has been generated by tech companies, especially those investing in AI. However, to date, many AI companies are valued far above what they are actually earning. Will that change in 2025? Will the hype continue?     

Here at Minich MacGregor Wealth Management, we’ll continue to study these issues…and even though you are not currently a client, we will update you as we get answers. But while there will always be question marks, we remain confident in our direction and in our ability to keep moving forward — whether the horizon is clear or blurry, the sky blue or gray.

So, that’s 2024! We hope it was a wonderful year. On behalf of our entire team, we look forward to making 2025 even better. As always, please let us know if you have any questions, or if we can ever help you and your family the way we help our client families. Have a Happy New Year!

Sources:
1 “12-month percentage change, Consumer Price Index,” U.S. Bureau of Labor Statistics, https://www.bls.gov/charts/consumer-price-index/consumer-price-index-by-category-line-chart.htm
2 “U.S. Equities April 2024,” S&P Dow Jones Indices, https://www.spglobal.com/spdji/en/documents/commentary/market-attributes-us-equities-202404.pdf
3 “Federal Funds Effective Rate,” Federal Reserve Bank of St. Louis, https://fred.stlouisfed.org/series/FEDFUNDS
4 “Gross Domestic Product,” U.S. Bureau of Economic Analysis, https://www.bea.gov/data/gdp/gross-domestic-product
5 “GDP Now,” Federal Reserve Banks of Atlanta, https://www.atlantafed.org/cqer/research/gdpnow/archives
6 “S&P 500 ends 5-month rally with October downturn,” S&P Global, https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/s-p-500-ends-5-month-rally-with-october-downturn-86066097
7 “S&P 500 posts 23% gain for 2024,” CNBC, https://www.cnbc.com/2024/12/30/stock-market-today-live-updates.html
8 “Fed cuts key interest rate but signals elevated inflation is likely to persist,” https://www.nbcnews.com/business/economy/federal-reserve-interest-rate-cut-december-2024-much-economy-rcna184586

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Picture of a Melting Snowman

Michelangelo’s Snowman

Written by Minich MacGregor Wealth Management on . Posted in Uncategorized.

One cold January morning in 1494, the citizens of Florence, Italy woke up to an extremely rare sight: Their city was covered in snow. 

Snow is uncommon in Florence, and this was no mere coating of powdered sugar.  There was so much snow that kids today would probably grab their sleds and hightail it to the nearest hill.  So much snow that trucks with plows would be required just to keep the roads clear. 

It’s impossible to know how most Florentines reacted to their new winter wonderland, but we do know what one person thought.  When Piero de Medici, perhaps the wealthiest and most powerful man in Florence looked out that morning and saw his courtyard covered in snow, he decided to commission an artist. The artist in question was young, barely nineteen, with a permanently disfigured nose.  But his name would become famous throughout Europe, and the world has never forgotten it.   

His name was Michelangelo, and his task was as surprising as it was simple: Build a snowman.

Given the sculptures Michelangelo produced later in life, it’s reasonable to assume that his was the most beautiful snowman ever made.  (At least one other artist wrote that it was very beautiful.)  But we have no way of knowing exactly what Michelangelo’s snowman looked like…because it melted. 

It’s ironic to think of a great work of art so impermanent that it could literally melt.  It almost seems like a waste.  Why go to all that trouble creating something beautiful, knowing it will never last?  But we don’t think it was a waste.  In fact, when we ponder the story of Michelangelo’s snowman, we think there’s something meaningful we can take from it. 

Every January, many of us set New Year’s resolutions.  We make promises to ourselves about the goals we want to achieve and the ways we want to improve.  Go there, become this, do that.  But we all know that resolutions don’t always last.  Often, we may follow through on them for a month, or a season, or even a year…until life interrupts us.  When that happens, we often move onto other things, leaving our resolutions to melt away. 

But that doesn’t mean our resolutions were a waste.  It doesn’t mean the work we put into them was worthless. 

Think what often happens even when we fall short of our resolutions:

  1. Sometimes, we return to our resolution months or years later, now armed with more knowledge and the experience gained from our first attempt.  Everything we need, in other words, to actually achieve it this time.
  2. Sometimes, we may not achieve everything we set out to do, and yet our lives still become better for the attempt.  A person may not lose the 20 pounds they wanted, but the 10 pounds they did lose helped their blood pressure drop and their knees feel better.  A person may not quite learn how to speak French, but in the process, discover they have a real love and ability to cook French food.
  3. Sometimes, even half-finished resolutions may lead us to the things we are truly meant to do.  Maybe you won’t “write in your journal every day” like you wanted, but instead learn you have a flair for writing and decide to write something else.  Maybe you won’t get that promotion you wanted…but instead get a different job that you end up loving more than you ever thought possible. 

Whenever we set goals and resolutions, whenever we lift our eyes up and aim just a little higher, we are shaping our lives into our own works of art.  Sometimes they don’t last – but the beauty is not in their permanence.  It’s in the ways they enrich our lives. The ways they help us get just a little closer to where we want to go…and become just a little more like who we want to be. 

Michelangelo’s snowman melted.  We don’t know what it looked like.  But we do know that he created something beautiful.  Something that enriched both his life and the lives of those who saw it, even if only for a little while. 

And we know something else, too.  We know what came after. 

For just ten years later, Michelangelo created a new sculpture, one that we can hope will never be lost to temperature or time.

It was the statue of David.

As we enter a New Year, we wish you best of luck with your goals and resolutions.  Please let us know if there is ever any way we can help you achieve them.  But most of all, we wish you joy in the journey.  May your resolutions get you ever closer to where you want to go…and become stepping stones and practice runs for whatever works of art you’re destined to create.

Happy New Year!   

Winter Tips to Save Your Home and Wallet

Written by Minich MacGregor Wealth Management on . Posted in Uncategorized.

Winter may bring snowy landscapes and cozy evenings by the fire, but it can also bring unexpected challenges for your home and budget. To make this season more about enjoying the cold and less about battling it, follow these practical tips to protect your space, save energy, and stay comfortable.

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Questions You Were Afraid to Ask # 15

Written by Minich MacGregor Wealth Management on . Posted in Uncategorized.

The only bad question is the one left unasked. That’s the premise behind many of our posts. Each covers a different investment-related question that many people have but are afraid to ask.

In recent posts, we’ve been breaking down some of the more common bits of financial jargon that you are likely to hear in the media.  In this message, let’s look at: 

Questions You Were Afraid to Ask #15:
What’s the difference between Large Cap, Mid Cap, and Small Cap stocks?

If you’ve ever researched a stock or listened to talking heads in the media, you’ve probably heard terms like “large cap stocks” before.  You may also have seen these terms when reviewing your 401(k).  If so, you’ve probably wondered what the word “cap” even means. 

A stock’s “cap” refers to its market capitalization.  This is the total market value of a company’s available stock shares.  In essence, it is a quick and easy way to determine how valuable the market perceives a company to be. 

To determine a company’s market cap, investors look at all the shares the company has made available and then multiply that number by its current stock price.  For example, let’s say the ACME Corporation has twenty-five million available shares with a current stock price of $50.  Twenty-five million multiplied by fifty is 1,250,000,000, so ACME’s market cap is $1.25 billion.

Now, this number doesn’t mean anything on its own.  It’s when you compare it to other companies that distinctions can be made.  That’s where the terms large, mid, and small come in.

There is no single agreed-upon definition of what makes a company large-cap versus mid-cap, or mid-cap versus small-cap.  But generally speaking, many investors break down these categories like this:

  • Large-Cap: Market value over $10 billion
  • Mid-Cap: Market value over $2 billion
  • Small-Cap: Market value over $250 million

So, in our example, ACME Corporation would be classified as a small-cap company. 

Some investors will make further distinctions.  For instance, you may sometimes see the term mega-cap, which is for companies with a market value over $200 billion.  At the other end of the spectrum, micro-cap refers to companies with a market value of less than $250 million. 

When people think about the stock market, they often think in terms of a specific index, like the S&P 500.  But different indexes often only contain companies above a specific size.  For example, the S&P 500 contains the five hundred biggest companies in the overall market. That means it only includes mega- and large-cap stocks.  Another popular index, the Russell 2000, contains only small-cap companies. 

One reason market cap matters is because it gives you more information about a stock than you can get just from its price.  For example, imagine two companies that each have a stock price of $75.  The first company has fifty million total shares available.  The second company has a billion shares.  That meansthe first company has a total market capitalization of $375 million.  The second company’s market cap, on the other hand, is $75 billion.  So, despite having the same price per share, the first company is a small-cap stock, and the second is a large-cap stock. 

Why is this important for investors to know? Because a stock’s cap can dramatically affect both its potential risk and potential reward. 

Generally speaking, large-cap stock companies are not going to grow as fast as a small-cap stock company can.  That’s because the former simply doesn’t have as much room for growth.  Large-cap companies tend to be older and more well-established. As a result, any future growth will likely be slow and steady rather than fast and explosive.  Small-cap companies, on the other hand, still have the potential to become large-cap companies in the future.  That means their potential for growth — and thus, reward — is greater. 

That said, large-cap companies have also tended to be more stable.  They have stronger financial situations, greater brand recognition, and more revenue.  That makes their stock price less vulnerable to market volatility.  Meanwhile, small-cap companies, even if they’re growing fast, may not technically be making any profit at all.  Their financial situation may be much weaker. That makes them much more vulnerable…and much riskier for investors. 

Of course, these are all just generalizations.  Large-cap companies can sometimes experience fast growth or even fail, of course.   Mid- and small-caps can thrive for years.  But as a general rule, there is an inverse relationship between a stock’s capitalization and both its risk and return.  Understanding that relationship is critical to making good investment decisions! 

So, that’s market capitalization in a nutshell.  Next time, we’ll look at a related bit of jargon: Blue chip stocks versus penny stocks.  Until next time! 

1 “Market Cap Explained,” FINRA, https://www.finra.org/investors/insights/market-cap

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