Skip to main content
Chasing Squirrels image

Don’t Chase Squirrels: Stick to Your Plan

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

There are few activities more relaxing than a picnic in the park on a warm summer’s evening. But even under the glow of a setting sun, hearing the distant sounds of birds chirping and children laughing, we still can find it hard to turn off the “financial advisor” part of our brains.

Especially when we see a dog chasing squirrels.

We’re sure you’ve seen it before: When an excitable pooch sees a flash of movement in the corner of his left eye. He darts off, trying to catch the furry prey, only for it to scamper up a tree. Then, to the right, another squirrel. Or a bird, a rabbit, or a cat. Off he goes. But after ten minutes of frantic pursuit, swapping one target for another, the dog usually comes up empty-pawed.

What does this have to do with being a financial advisor? Well, because whenever we see this, our minds turn to how many investors often get caught up in chasing squirrels, too.

One of the most common questions we get from friends, acquaintances, and even potential clients is, “Is it time for me to put everything into X?” In other words, “is it time to change what I’m doing and do something totally different?”

Now, the thing about “X” is not only that it can be anything; it changes based on the season, or the most recent headlines, or the discourse on social media. Sometimes, X is the overall stock market, but just as often, it’s something like:

  • A specific company or industry that’s dominating the news
  • Cryptocurrency
  • Extremely complex financial products
  • Gold or some other type of commodity

Here’s the other thing about X: It’s not always bad. Sometimes, for some investors, anything from the list above could be a potentially goodinvestment. The problem is not X itself. The problem is that X is always changing. And when investors constantly seek to change with it, always bouncing from one hot trend to the next, they are, in effect, chasing squirrels.

All investors are vulnerable to this, even the most experienced. FOMO, or the “fear of missing out,” is a very real and powerful phenomenon. Nobody wants to feel left behind. Nobody wants to miss out on an opportunity.

Squirrel chasing can become especially prevalent when the markets are volatile or flat for long stretches. During times like this, many investors may seek to move their money into cash, bonds, or some other type of investment. They reason that they can skip the downside, wait patiently, and then come back in when the markets recover.

But this is squirrel chasing, too, and here’s why. Take a look at this chart.1

DecadePrice
return		Excluding best 10 days per decadeExcluding worst 10 days per decadeExcluding best/worst 10 days per decade
1970s17%-20%59%8%
1980s227%108%572%328%
1990s316%186%526%330%
2000s-24%-62%57%-21%
2010s190%95%351%203%

According to research, if investors were somehow able to skip the worst ten market trading days in a given decade, their total returns would be astronomically high. But there are two problems with this. The first problem is that if those same investors missed out on the ten best days each decade, their returns would be significantly lower than if they just stayed put. The second problem? The market’s best days often follow the worst. So even investors who somehow skip a bad day will probably end up missing out on a great day. And missing out on too many great days can be disastrous.

Here’s another way to look at it. According to more recent research, if a hypothetical investor put $10,000 investment into the S&P 500 between the beginning of 2005 and the end of 2024 and did nothing else, their total return would be 10.4%.2 If that same investor missed the market’s ten best days? The return would be 6.1%. If they missed the thirty best days? 3.1%. Forty? -0.6%. The data is clear: When it comes to investing in your long-term goals, there is only one dependable approach: Consistency. Sticking to a long-term plan is much more reliable than chasing squirrels.

The reason we’re saying all this is because not too long ago, investors had to endure some very bad days. Stocks were historically volatile in early April and even flirted with bear market territory. Many investors sold off, tried to time the market, or placed bets on some other type of investment. But by the end of June, the S&P 500 and NASDAQ had both risen to all-time highs.3

Of course, there will be volatile days in the future. There will be times when a new, enticing form of “X” dominates the headlines. And there will be times when we need to review your investments and determine if they still make sense for your situation. But when it comes to investing, the best question we get asked is this: “What’s the most important thing I can do to work toward my goals?”

The answer, of course, is to never, ever chase squirrels.

Have a great summer!

1 “Why investors should never try to time the stock market,” CNBC, www.cnbc.com/2021/03/24/this-chart-shows-why-investors-should-never-try-to-time-the-stock-market.html
2 “Selling out during market’s worst days can hurt you,” CNBC, www.cnbc.com/2025/04/07/selling-out-during-the-markets-worst-days-can-hurt-you-research.html
3 “America’s stock market rebound is complete as S&P 500, Nasdaq hit record highs,” CNN, www.cnn.com/2025/06/27/investing/stock-market-record-dow-sandp

Scrollable

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

Scrollable

Tax Mistakes header image

4 Common Tax Mistakes

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

mistake 1

MISTAKE #1: Filing Too Early

It may be surprising to hear, but many people are so anxious to get their filing done ahead of time, they file their taxes before receiving all the proper documentation they need to ensure their information is accurate. This can lead to mistakes and processing delays.

mistake 2

MISTAKE #2: Missing Eligible Credits and Deductions

There are many credits and deductions you may be eligible for. But some of these, like the Earned Income Tax Credit, the Child Tax Credit, energy tax credits, and various itemized deductions, can be difficult to figure out, causing some to skip out on them entirely. This is why working with a good tax professional can really pay off.

mistake 3

MISTAKE #3: Forgetting to Contribute to an IRA

Some taxpayers forget to contribute to an Individual Retirement Account each year. These contributions are tax-deferred, meaning they can help reduce your taxable income. For the 2023 tax year, the contribution limit is $6,500 for those under age 50 and $7,500 for those over.*

mistake 4

MISTAKE #4: Not Reporting All Income

Many taxpayers only think of their paycheck when reporting income, forgetting to factor in dividends, bank interest, and other income sources. This information is critical for both calculating the credits and deductions you can take as well as the refund you are entitled to.

* “IRA Contribution Limits” – Internal Revenue Service

2023-in-Review

2023: The Year in Review

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

Every January, it’s customary to 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? 

As you know, many noteworthy and historic events happened in 2023.  Conflicts in Gaza, Ukraine, and Sudan.  India surpassed China as the most populous country in the world.  New temperature records were set all around the globe.  The use of “artificial intelligence” exploded and turned multiple industries on their heads.  Chinese spy balloons and deep-sea submarines grabbed the headlines.  The “Barbenheimer” phenomenon reinvigorated Hollywood. 

But in some ways, one of the most notable occurrences of 2023 is what didn’t happen: We never entered a recession. 

When 2023 began, the fear of a recession was so widespread that it almost seemed inevitable.  According to one survey, 70% of economists expected a recession to hit the U.S. in 2023.1  Another survey found 58% of economists believed there was a more than 50% chance of a recession. 1  For politicians, pundits, and analysts, it was practically all they could talk about. 

But it never happened.  Instead, the economy grew by 2.2% in the first quarter, 2.1% in the second, and 4.9% in the third.2  (As of this writing, the numbers for Q4 are not yet available, but it’s expected to go up again.)  None of this is to say that our economy is perfect, or that we won’t have a recession in the future.  But for 2023, all the gloomy forecasts simply didn’t come to pass. 

Now, let’s be fair to all those economists who got it wrong: They had very good reasons for expecting a recession.  Reasons based on data, logic, and history. 

You see, when the year began, the U.S. was coming off a nasty 2022.  While consumer prices were already coming down from their earlier highs, the national inflation rate was still 6.5%.3  Interest rates, meanwhile, had risen dramatically, from just above 0% at the beginning of 2022 to over 4% by the end.4  It was already the highest level we’d seen in fifteen years – just before the Great Recession, in fact – and every indication was that rates would continue to rise higher.  All this economic pain was reflected in the stock market.  The S&P 500, for example, dropped over 19% in 2022.5 

For economists, all this data seemed to point a clear way forward.  The Federal Reserve is mandated to keep consumer prices as stable as possible.  (Its target has long been to hold inflation to around 2%.)  When inflation runs hot, the Fed’s main tool for lowering it is to raise interest rates.  Higher rates often lead to lower consumer spending.  Lower spending, in turn, prompts businesses to decrease the cost of the goods and services they provide.  Essentially, higher rates create an environment where supply is greater than demand, thus cooling inflation.

But there’s a side effect to this.  If spending drops too much, businesses are often forced to cut back on expansion, investment, and labor costs.  This leads to a rise in unemployment…and a contracting economy.  In short, a recession. 

This string of events isn’t just logical.  It’s supported by history.  When inflation has skyrocketed in the past, the Fed’s playbook has usually worked to bring prices down…but it’s usually triggered a recession, too.  Economists call this a “hard landing.” 

Look at these two charts.  The top shows interest rate levels since 1955.3  The gray bars indicate a recession.  Notice how often a gray bar appears in the aftermath of a sharp rise in rates?  Similarly, the bottom chart shows the unemployment rate.6  See how the gray bars always coincide with a major spike in unemployment?  It’s clear that, historically, fast-rising rates often trigger a rise in unemployment…which contributes to a recession. 

What about when prices come down, but the economy does not?  Economists call that a soft landing, and it’s proven to be very difficult to achieve.  It’s no surprise, then, that most economists predicted a hard landing in 2023.

One year later, that hasn’t happened.  Interest rates did continue to rise.  As of this writing, they’re at 5.3%.4  Inflation has continued to cool, albeit slowly.  As of November, the inflation rate was 3.1%.  That’s a 3.4% drop from the beginning of the year.3  But consumer spending has remained steady.  The labor market has remained strong.  The unemployment rate was only 3.7% as of November.6  And, as we’ve already covered, the economy has continued to grow. 

From a financial standpoint, this, to us, is the major storyline of 2023.  Which means we must ask ourselves: “What can we learn from it?”  As financial advisors, we’ve taken the time to jot down a few lessons we think are worth remembering as we move into the New Year.  Here they are:

#1: Always emphasize preparation over prediction.  The economists who predicted a recession weren’t stupid.  They used the best data they had to make the best predictions they could.  But 2023 shows that even the most well-informed people simply can’t see the future.  Even the near future!  There are simply too many variables to consider.  That’s why, as investors, we must always emphasize planning over predicting.  We can’t predict when the markets will drop nearly 20%, as they did in 2022.5  Or, when they’ll rise by well over 20%, as they did in 2023.5  What we do at Minich MacGregor Wealth Management is plan ahead for what each of our clients should do if the markets fall, or if they rise.  We help our clients prepare mentally and financially for both market storms and market sunshine.  So that they can weather the former and take advantage of the latter. 

When investors predict, they’re essentially swinging for the fences on every pitch.  Occasionally, a prediction can lead to a home run…but it can also lead to a lot of strike outs.  By planning, we don’t have to swing at all.  Since we can’t control the situation, we simply make the best out of every situation.  We control only what we can control – ourselves. 

#2: Be wary of confirmation bias.  Earlier in the year, we spoke to many people who were convinced a recession would happen.  Because of that, they tended to disregard all data that pointed away from a recession, and only valued information that confirmed what they already believed.  As a result, many investors missed out on a stellar market recovery.  Thankfully, our clients did not.  This is another example of why preparing is much better than predicting.  It removes emotion from decision-making.  At Minich MacGregor Wealth Management, we’re not so focused on “being right” as we are on “being ready.” 

#3: Remember that past performance is no guarantee of future results.  You’ve probably seen this line in the past, and 2023 is a great example of why.  Just because rising interest rates have led to recessions in the past doesn’t mean they always will.  Just because the markets went one direction yesterday doesn’t mean they’ll go the same direction tomorrow.  While history isa great resource to draw from when making decisions, it’s just a guide, not a guarantee.  

#4: At the same time, don’t anchor to the present.  As humans, we have a natural tendency to think that the way things are today is how they’ll be tomorrow.  When 2022 ended, many investors felt that 2023 would be much the same.  Now, investors run the risk of thinking that just because a recession didn’t happen last year, it won’t happen this year. 

Again, it all goes back to planning and preparation.  Here at Minich MacGregor Wealth Management, we will continue to prepare for all possible outcomes.  We’ll help our clients plan for how to reach the outcomes they want and avoid the ones they don’t.  We would love to help you, too!  But instead of predicting, instead of assuming, instead of anchoring, we will accept that the future is written in clay, not stone.  Only when it becomes the past does it harden.  By doing this, we can help shape your future into whatever it is you want it to be. 

So, that’s 2023!  We hope it was a wonderful year.  If you ever need any help making 2024 even better, know that we are always here.  In the meantime, we wish you a Happy New Year!        

SOURCES:

1 “Top US economists are often wrong – should we trust their predictions?” The Guardian, www.theguardian.com/business/2023/nov/19/us-economists-wrong-predictions

2 “Annualized growth of real GDP in the United States,” Statista, www.statista.com/statistics/188185/percent-change-from-preceding-period-in-real-gdp-in-the-us/

3 “United States Inflation Rate,” Trading Economics, https://tradingeconomics.com/united-states/inflation-cpi

4 “Federal Funds Effective Rate,” St. Louis Fed, https://fred.stlouisfed.org/series/FEDFUNDS

5 “S&P 500 Historical Annual Returns,” Macrotrends, https://www.macrotrends.net/2526/sp-500-historical-annual-returns

6 “Unemployment Rate,” St. Louis Fed, https://fred.stlouisfed.org/series/UNRATE

Tools for investing

Questions You Were Afraid to Ask #10

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

The only bad question is the one left unasked. That’s the premise behind many of our recent posts. Each covers a different investment-related question that many people have but are afraid to ask.  So far, we’ve discussed the essentials of how the markets work, the differences between various types of investment funds, and the ins and outs of stocks and bonds. 

A few months ago, however, an acquaintance of ours asked us a question not about investments but investing.  Specifically, she wanted to know our thoughts on the modern trend of using mobile investing platforms — aka “investing apps.” 

It’s a terrific question, because the use of such apps — and the number of apps available — has exploded in the past few years.  So, in this message, we’d like to continue our series by answering:

Questions You Were Afraid to Ask #10:
What are the pros and cons of investing apps? 

Mobile investing apps enable people to buy and sell certain types of securities right from their phone.  They have provided investors with a quick and easy way to access the markets.  For new investors who are just getting started, these apps have made the act of investing more accessible than ever before. 

That’s a good thing!  Even today, many people only invest through an employer-sponsored retirement account, like a 401(k).  That’s because they may lack the resources, confidence, or ability to invest in any other way.  But not everyone has access to a 401(k).  And while 401(k)s are a great way to save for retirement, many people have other financial goals they want to invest for, too.  Mobile apps provide a handy, ready-made way to do just that. 

Continuing with the accessibility theme, many apps enable you to invest right from your phone, anytime, anywhere.  In addition, many apps don’t require a minimum deposit, so you can start investing with just a few dollars.  Finally, the most popular apps often charge extremely low fees – or even no fees at all – to buy or sell stocks and ETFs. 

Many apps also come with features beyond just trading.  Some apps will help you invest any spare change or extra money, rather than let it simply lie around in a bank account.  Others enable you to invest automatically – daily, weekly, bi-weekly, monthly, etc.  That’s neat because investing regularly is a key part of building a nest egg. 

It’s no surprise, then, that these apps have skyrocketed in popularity.  In fact, app usage increased from 28.9 million in 2016 to more than 137 million in 2021.1  Part of this surge was undoubtedly due to the pandemic.  With social distancing, many used the time to try new activities and learn new skills from the safety of their own home…investing included. 

But before you whip out your phone and start trading, there are some important things to know, first.  Investment apps come with definite advantages…but also some unquestionable downsides.  When you think about it, an app is essentially a tool.  Like any tool, there are things it does well…and things it can’t do at all.  And, like any tool, it can even be dangerous if misused. 

The first issue: the very accessibility that makes these apps so popular is also what makes them so risky.  When you have a tool that provides easy, no-cost trading, it can be extremely tempting to overuse it.  Researchers have found that this temptation can lead to overly risky and emotional decision-making, as investors try to chase the latest hot stock or constantly guess what tomorrow will bring.2  The result: Pennies saved on fees; fortunes potentially lost on speculation. 

The second and biggest issue is that while these apps make it easy to invest, they provide no help with reaching your financial goals.  No app, no matter how sophisticated, can answer your questions.  Especially when you don’t even know the questions to ask.  No app can hold your hand and help you judge between emotion-driving headlines and events that necessitate changes to a portfolio.  No app can help you determine which investments are right for your situation.  Just as you can’t hammer nails with a saw, or tighten a bolt with a screwdriver, no app can help you plan for where you want to go and what you need to get there. 

Take a moment to think about the goals you have in your life.  They could be anything.  For instance, here are a few our clients have expressed to me over the years: Start a new business.  Visit the country of their ancestors.  Support local charities and causes.  Design and build their own house.  Play as much golf as possible.  Volunteer.  Visit every MLB stadium.  Send their kids to college.  Read more books on the beach.  Tour national parks in a motorhome.  Spend time with family.

Achieving these goals often requires investing.  But there is more to investing than just buying and selling stocks.  More to investing than simply trading.  Investing, when you get down to it, is the process of determining what you want, what kind of return you need to get it, and where to place your money for the long term to maximize your chance of earning that return.  It’s a process.  A process that should start now, and last for the rest of your life.  A process that an app alone cannot handle – just as you can’t build a house with only a saw. 

So, our thoughts on mobile investing apps?  They are a tool, and for some people, a very useful one.  But they should never be the only one in your toolbox. 

In our next post, we’ll look at two other modern investing trends. 

1 “Investing App Usage Statistics,” Business of Apps, January 9, 2023.  https://www.businessofapps.com/data/stock-trading-app-market/

2 “Gamified apps push traders to make riskier investments,” The Star, January 18, 2022.  https://www.thestar.com/business/2022/01/18/gamified-apps-push-diy-traders-to-make-riskier-investments-study.html

WWII planes image

What makes Veterans Day so important?

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

When Dr. Harold Brown was young, he dreamed of flying.  So, he worked hard as a “soda jerk,” making ice cream sodas at the local drugstore every afternoon to save up enough money for flight school.  Eventually, he amassed a grand total of $35…enough for seven lessons. 

It was the early 1940s. 

While Harold didn’t know it, hundreds of young men like him were all doing the same thing.  Teaching themselves to fly, so that when their country called, they would be able to answer. 

That call came on December 7, 1941.  After the attack on Pearl Harbor, over 134,000 Americans rushed to enlist.1  Harold was no exception.  As soon as he graduated from high school, he applied to join a new, recently activated unit of airmen.  

But there was a major obstacle to overcome – Harold and many of these other pilots were Black. 

Due to the racial attitudes of the day, many in the military did not believe Black people could make good pilots.  During World War I, all African-American pilots were rejected from serving.  In 1925, a War Department report suggested Black soldiers were “cowardly, incapable of higher learning, and lazy.”2  Even by 1940, the U.S. Census counted only 124 Black pilots in the United States. 

Despite this prejudice, many, like Harold, had participated in civilian pilot training programs, and were eager to show what they could do in service to their country.  So, after sustained public pressure, the War Department finally created an all-Black unit called the 99th Pursuit Squadron.  (The 100th, the 301st, and the 302nd squadrons would come online later in the war.)  The pilots began training at facilities in Tuskegee, Alabama, where they were joined by thousands of other African-Americans, all training to be navigators, bombardiers, flight surgeons, mechanics, and engineers. 

These were the legendary Tuskegee Airmen. 

From the start, nothing was easy for these trailblazers. They were spat on and laughed at.  Abused and humiliated.  Passed over for promotion.  Denied entry into nearby clubs, movie theaters, and restaurants. Forbidden to train with white pilots.  Local laundries sometimes refused to wash their clothes.  One Black lieutenant was court-martialed after trying to enter the base Officer’s Club.  Most of the airmen experienced segregation and poor treatment just getting to Tuskegee.  Perhaps worst of all was the constant expectation they would fail.  As Harold later described it: “It was felt that this big experiment was going to fail and fall flat on its face.  ‘They’ll never make it as pilots.’  That was really one of our biggest motivations – that we cannot fail.  We just can’t.”2

Things weren’t any better in Europe.  Harold and the other pilots would have to fly from their base to a “white base” just to receive their orders.  And they would see enemy propaganda posters depicting them as gorillas or apes…as people somehow less than human. 

Despite these conditions, the Tuskegee Airmen became one of the most elite groups in the entire American military.  After their combat missions began in 1943, the records followed.  Number of enemy aircraft destroyed.  Number of sorties flown.  Number of missions completed.  Their ability to protect bomber formations from harm became the stuff of legend.  (There is a story that the Tuskegee Airmen never lost a bomber.  That’s not quite true – records indicate at least 25 bombers were shot down – but this was a much higher success rate than other units, which lost an average of 46 bombers.3)       

And, of course, they gave their lives in service to our country.  At least 66 of the Tuskegee Airmen were killed in action, while another 32 were captured as POWs.3  That includes Harold, who was shot down in Austria and nearly murdered by an angry mob.

When the Tuskegee Airmen returned home after the war, they came home to a country that was still in the grip of segregation.  Despite being ace pilots, many who left the military were prevented from flying commercially and had to turn to other jobs.  But without realizing it, they had changed the military.  They had changed the country.

Because of their example, the Tuskegee Airmen helped prove to the nation that it didn’t matter what color your skin was.  When it comes to serving your country, all that matters is what’s in your head and in your heart.  Courage, commitment, self-sacrifice…these are qualities that transcend any sort of category.  They were qualities the Tuskegee Airmen showed every day.  Qualities that helped lead to the desegregation of the military in 1948…and, eventually, the end of segregation everywhere. 

When World War II ended, there were nearly a thousand pilots who trained at Tuskegee.  Today, in 2023, there are less than 10.4  Harold himself passed away in January at the age of 98.  But, as we prepare to celebrate another Veterans Day, I think it’s important to remember the Airmen and their legacy.  Like all veterans, their choice to serve was not an easy one.  It was filled with danger and difficulty.  But because of their decision – because of their courage, their commitment – they not only helped win the war…they helped shape our country.  And that is what makes Veterans Day so important.  It’s a chance to truly give thanks to the men and women who not only defended our nation but made it what it is today. 

As Harold once said: “I always hoped that the country would change…and, of course, the country has changed.  Are there still problems?  Sure, there are still problems out there.  But even with the problems, we aren’t anyplace close to where we were 70-some years ago.  It’s a whole new world.”2 

A whole new world.  A world that the Tuskegee Airmen – and all our veterans – helped make for us.   
           
On behalf of everyone at Minich MacGregor Wealth Management, we wish you a happy Veterans Day…and a heartfelt “Thank you” to all who serve. 

1 “14 Interesting Pearl Harbor Facts,” Pearl Harbor Tours, https://click.mmwealth.com/e/877382/blog-facts-about-pearl-harbor-/bq6zqg/3744071557/h/PCwSZhbr4OGDqG34eO0jepsakDhStmAQCAjnyBLlL9Y
2 “Harold Brown, one of the last Tuskegee Airmen, recalls battling for victory,” The Plain Dealer, https://click.mmwealth.com/e/877382/-for-victory-and-equality-html/bq6zqk/3744071557/h/PCwSZhbr4OGDqG34eO0jepsakDhStmAQCAjnyBLlL9Y
3 “Tuskegee Airmen,” History.com, https://click.mmwealth.com/e/877382/s-world-war-ii-tuskegee-airmen/bq6zqn/3744071557/h/PCwSZhbr4OGDqG34eO0jepsakDhStmAQCAjnyBLlL9Y
4 “Harold Brown, Tuskegee Airman Who Faced a Lynch Mob, Dies at 98,” The NY Times, https://click.mmwealth.com/e/877382/ed-a-lynch-mob-dies-at-98-html/bq6zqr/3744071557/h/PCwSZhbr4OGDqG34eO0jepsakDhStmAQCAjnyBLlL9Y

NYSE picture

Understanding the Market Correction – 2023

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

You probably saw the news: On October 27, the S&P 500 officially slid into a market correction.

A correction is when the markets decline 10% or more from a recent peak.  In the S&P’s case, the “recent peak” was on July 31, when the index topped out at 4,588.1  On Friday, the index closed at 4,117 – a drop of 10.2%.1 

Market corrections are never fun, and there’s no way to know for sure how long one will last.  Historically, the average correction lasts for around four months, with the S&P 500 dipping around 13% before recovering.2 Of course, this is just the average.  Some corrections worsen and turn into bear markets.  Others last barely longer than the time it took for us to write this message.  (On Monday, October 30, for example, the S&P actually rose 1.2% and exited correction territory.3) Either way, corrections are not something to fear, but to understand – so that we can come through it stronger and healthier than before. 

To do that, we must understand why the markets have been sliding since July 31.  We use the word “slide” because that’s exactly what this correction has been.  Not a sharp, sudden drop, but a gradual slide, like the bumpy ones you see on a playground that rise and fall on the way to the ground.   While the S&P 500 dropped “at least 2% in a day on more than 20 occasions” in 2022, that’s only happened once in 2023, all the way back in February.4    

At first glance, it may seem a little puzzling that the markets have been sliding at all.  Do you remember how the markets surged during the first seven months of the year?  When 2023 kicked off, we were still coming to terms with stubborn inflation and rising interest rates.  Many economists predicted higher rates would lead to a recession.  But that didn’t happen.  The economy continued to grow.  The labor market added jobs.  Inflation cooled off.  As a result, many investors got excited, thinking maybe the Federal Reserve would stop hiking rates…or even start bringing rates down. 

Fast forward to today.  The economy continues to be healthy, having grown an impressive 4.9% in the third quarter.5  Inflation is significantly lower than where it was a year ago.  (In October of 2022, the inflation rate was 7.7%; as of this writing, that number is 3.7%.6)  And the unemployment rate is holding steady at 3.8%.7  But the markets move based either on excitement for the future, or fear of it – and these cheery numbers no longer generate the level of excitement they did earlier in the year. 

The reason is there are simply too many storm clouds obscuring the sunshine.  While inflation is much lower than last year, prices have ticked up slightly in recent months.  (We mentioned the inflation rate was 3.7% in September; it was 3.0% in June.6)  As a result, investors are now expecting the Federal Reserve to keep interest rates higher for longer.  Seeking to take advantage of this, many investors have moved over to U.S. Treasury bonds, driving the yield on 10-year bonds to its highest level in 16 years.  Since bonds are often seen as less volatile than stocks, when investors feel they can get a decent return with less volatility, they tend to move money out of the stock market and into the bond market.

As impressive as Q3 was for the economy, there are cloudy skies here, too.  This growth was largely driven by consumer spending – but how long consumers can continue to spend is an open question.  Some economists have noted that Americans’ after-tax income decreased by 1% over the summer, and the savings rate fell from 5.2% to 3.8%, too.5  Mortgage rates are near 8%, a 23-year high.8  Meanwhile, home sales are at a 13-year low.9  All this suggests that the Fed’s rate hikes, while cooling off inflation, have been cooling parts of the economy, too.

Couple all this with violence in the Middle East, political turmoil in Congress, and a potential government shutdown later in November, and you can see the problem.  Despite the strong economy, investors just aren’t seeing a good reason to put more money into the stock market…but lots of reasons to think that taking money out might be the prudent thing to do.  It’s not a market panic; it’s a market malaise.    

So, what does this all mean for us? 

We mentioned how the markets operate based on excitement for the future, or fear of it.  But that’s not how we operate.  We know that, while corrections are common and often temporary, they can worsen into bear markets.  Furthermore, any decline can have a significant impact on your portfolio, and by extension, your financial goals.  So, while our team doesn’t believe in panicking whenever a correction hits, neither do we believe in simply standing still.  Instead, we’ll continue to analyze how both the overall market – and the various sectors within the market – are trending.  We have put in place a series of rules that determine at what point in a trend we decide to buy, and when we decide to sell.  This enables us to switch between offense and defense at any time.  This, we feel, is the best way to keep you moving forward to your financial goals when the roads are good…and the best way to prevent you from backsliding when they’re bad. 

In the meantime, our advice is to enjoy the holiday season!  Our team will continue to focus on investments, so our clients can focus on why they invest: To create happy memories and live life to the fullest with their loved ones.  Happy Holidays! 

  

SOURCES:

1 “S&P 500,” St. Louis Fed, https://fred.stlouisfed.org/series/SP500

2 “Correction,” Investopedia, https://www.investopedia.com/terms/c/correction.asp

3 “Stocks rebound to start week,” CNBC, https://www.cnbc.com/2023/10/29/stock-market-today-live-updates.html

4 “S&P falls into correction,” Financial Times, https://www.ft.com/content/839d42e1-53ce-4f24-8b22-342ab761c0e4

5 “U.S. Economy Grew a Strong 4.9%,” The Wall Street Journal, https://www.wsj.com/economy/us-gdp-economy-third-quarter-f247fa45

6 “United States Inflation Rate,” Trading Economics, https://tradingeconomics.com/united-states/inflation-cpi

7 “The Employment Situation – September 2023,” U.S. Bureau of Labor Statistics, https://www.bls.gov/news.release/pdf/empsit.pdf

8 “30-Year Fixed Rate Mortgage Average,” St. Louis Fed, https://fred.stlouisfed.org/series/MORTGAGE30US

9 “America’s frozen housing market,” CNN Business, https://www.cnn.com/2023/10/19/homes/existing-home-sales-september/index.html