Financial advisors in Troy NY
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We're a team of investment advisers committed to protecting the financial future of our clients.
We're a team of investment advisers committed to protecting the financial future of our clients.
When investors think ofindices and passive investing, diversification immediately comes to mind. However, as seen by the chart below providedby Charles Schwab & Company, presently, the top 10 stocks in the S&P500 now represent an astounding 40% of the index, up from roughly 18% in2014. Furthermore, 53.32% of the S&P500 is now composed “sensitive” sectors which include Communication Services,Energy, Industrials and Technology (which alone is 33.16% of the index). This is hardly adequate diversification whenbuilding a portfolio suitable for Growth w/ reasonable distributions.
During the “accumulation” phase of life, where you have overa decade until you retire, the S&P 500 is an appropriate benchmark. However, when you are in the “assetpreservation” phase of your life, AKA retirement or near retirement, it isimportant to diversify. We are wellaware of the tradeoff between performance and the desire for reducedvolatility. Investors must keep in mindthat for many, the goal of your portfolio at this point in your “financial”life is to help maintain your standard of living without causing you to leasesleep at night during periods of market stress. One of the biggest challenges to investing is not doing the wrong thingat the wrong time.
“This presentation is not an offer or solicitation to buy or sell securities. The information contained in this presentation has been compiled from third party sources and is believed to be reliable, but its accuracy is not guaranteed and should not be relied upon in any way, whatsoever. Fagan portfolio characteristics and holdings are subject to change at any time and are based on a representative portfolio. Holdings and portfolio characteristics of individual client portfolios may differ, sometimes significantly, from those shown. This information does not constitute, and should not be construed as, investment advice or recommendations with respect to the securities listed.
Additional information including management fees and expenses is provided on our Form ADV Part 2. The actual return and value of an account fluctuate and, at any time, the account may be worth more or less than the amount invested. Bond Investments are affected by interest rate changes and the credit-worthiness of the issues held in the portfolio. A rise in interest rates will cause a decrease in the value of fixed income positions. Past performance results are not indicative of future results.”
2024 saw quite a divergence in returns between the leading sectors of the equity markets as compared to those that lagged. As is illustrated by the chart below, Communication Services (XLY), led by the two largest components, Meta (META) and Alphabet (GOOGL) was the strongest performer. Following closely was a resurgent Financial Services Sector (XLF) as longer-term interest rates rose, and the yield curve normalized. Of the eleven sectors that comprise the S&P 500, the third and final sector that outperformed was Consumer Discretionary (XLC), among which, its largest component, Amazon (AMZN), representing 21.15% of the index, saw its shares rise nearly fifty percent.
What struck us regarding last year was the severity of the underperformance of eight of the eleven sector and specifically, the bottom three, Materials (XLB), Energy (XLE) and Real Estate (XLRE), two of which rose less than three percent as the worst actually fell.
In our opinion, the Materials sector was pressured by worries over the strength of the global economy, specifically China, which, historically comprises a substantial percentage of worldwide demand. That along with increasing domestic supply is most likely what also held back the energy sector. Finally, we believe that the long-lasting impact on demand for commercial real estate stemming from the COVID pandemic as well as stubborn inflation pushed down the real estate market.
“This presentation is not an offer or solicitation to buy or sell securities. The information contained in this presentation has been compiled from third party sources and is believed to be reliable, but its accuracy is not guaranteed and should not be relied upon in any way, whatsoever. Fagan portfolio characteristics and holdings are subject to change at any time and are based on a representative portfolio. Holdings and portfolio characteristics of individual client portfolios may differ, sometimes significantly, from those shown. This information does not constitute, and should not be construed as, investment advice or recommendations with respect to the securities listed.
Additional information including management fees and expenses is provided on our Form ADV Part 2. The actual return and value of an account fluctuate and, at any time, the account may be worth more or less than the amount invested. Bond Investments are affected by interest rate changes and the credit-worthiness of the issues held in the portfolio. A rise in interest rates will cause a decrease in the value of fixed income positions. Past performance results are not indicative of future results.”
As is illustrated by the chart below, over the past twenty-five years, January and September mark the only two months in which the S&P 500 has risen less than fifty percent of the time. In addition, as we have noted frequently within our weekly Snapshot, “Sentiment/volatility will most likely remain until President-Elect Trump a) takes office and b) investors receive enough details regarding his economic agenda, to include tariffs and reducing the size of government. The Trump Administration will be one that has a broader range of potential outcomes as compared to that of a traditional politician. Even though his agenda might ultimately prove successful it may come with growing pains as he bucks the system.”
Should the market pullback, we would consider this an opportunity to buy as the economy remains relatively strong, especially compared to other economies.
Best wishes for a Happy, Healthy and Prosperous 2025!
“This presentation is not an offer or solicitation to buy or sell securities. The information contained in this presentation has been compiled from third party sources and is believed to be reliable, but its accuracy is not guaranteed and should not be relied upon in any way, whatsoever. Fagan portfolio characteristics and holdings are subject to change at any time and are based on a representative portfolio. Holdings and portfolio characteristics of individual client portfolios may differ, sometimes significantly, from those shown. This information does not constitute, and should not be construed as, investment advice or recommendations with respect to the securities listed.
Additional information including management fees and expenses is provided on our Form ADV Part 2. The actual return and value of an account fluctuate and, at any time, the account may be worth more or less than the amount invested. Bond Investments are affected by interest rate changes and the credit-worthiness of the issues held in the portfolio. A rise in interest rates will cause a decrease in the value of fixed income positions. Past performance results are not indicative of future results.”
