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LIFE Newsletter December 2023

We’re excited for what’s ahead

This year it was important to us to shift to producing content that we resonated with. One of the biggest changes for our Life Newsletter was highlighting organizations that we had the opportunity to support this year. Each charity we highlighted received a $500 donation from Abound Financial.

We’re excited to continue to share more about the causes that we’re passionate about and hope they inspire you as much as they inspire us.

Life Lessons

“A faithful man will abound with blessings, but whoever hastens to be rich will not go unpunished.”
Proverbs 28:20 ESV

Investment Updates

Per LPL Research’s Global Portfolio Strategy Report – For complete copy of the report, click here.

INVESTMENT TAKEAWAYS:

  • The STAAC maintains its recommended neutral equities allocation based on the Committee’s assessment that the risk-reward trade-off between equities and fixed income is roughly balanced. Seasonality remains favorable and lower yields are supportive of valuations.

  • The Committee favors large cap stocks over their smaller brethren ahead of a likely economic slowdown over the next several months.

  • If the downward trajectory in inflation remains intact and interest rate stabilize or fall, growth style stocks may outperform.

  • STAAC favors U.S. equities over developed international due to relatively stronger economic growth outlook and superior earnings power, though the Committee still finds Japanese equities attractive.

  • The bond market is coming to grips with the Fed’s higher for longer narrative so expected rate cuts continue to get priced out, which has put upward pressure on longer maturity Treasury yields. Moreover, Treasury supply is expected to increase in the coming quarters, which will likely also keep pressure on yields. As such, our updated year-end 2023 target for the 10-year Treasury yield is 4.25% to 4.75%.

  • The selloff in the banking sector has provided an attractive opportunity in preferred securities; however, the risk-reward to remain consistent for core bond sectors (U.S. Treasury, Agency mortgage-backed securities (MBS), investment-grade corporates) is more attractive than plus sectors, in our view.

This research material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

Faith in Action

As we look back on a year of ‘Faith in Action,’ these stories of redemption, empowerment, and compassion serve as powerful reminders. From personal transformations to community empowerment, each narrative reflects the impact a few individuals can make on the world. As we approach the year’s end, let these stories inspire us to continue making a positive difference through acts of kindness and unwavering faith.

In February, we introduced you to Boomer Bennett, Director of Youth for Christ Placer County. Once a prominent gang member, Boomer discovered faith in Christ during a 16-year prison sentence, showcasing the profound impact of redemption. Now a Christian thought leader, he passionately establishes Campus Life Clubs in middle schools, high schools, and college campuses, collaborating with students, community leaders, and parents. Boomer’s mission with Youth for Christ is to cultivate Christian communities on campus, empowering students to share their faith, glorify God through their lifestyle, and inspire positive change.

If you would like more information or are feeling inclined to give to this cause you can find more information here:

April brought us Steve Burdick, Executive Director of College Golf Fellowship. Steve discovered faith during his time at Stanford and his journey from winning a National Championship to facing setbacks led to his reliance on faith for contentment and purpose. He now guides college golfers through College Golf Fellowship, focusing on making disciples by investing relationally with the Gospel in the world of college golf.

If you would like more information or are feeling inclined to give to this cause you can find more information here:

In June, we introduced Julie Morales-Harrold Chief Operation Officer of Agape International Missions (AIM). Julie began her journey with AIM on a short-term mission trip to Cambodia. Moved by the heartbreaking stories of the children she met there, Julie found her ‘why’ and had to get involved. AIM’s focus is on rescuing, healing and empowering survivors of sex trafficking through a holistic approach meeting spiritual, emotional, social, educational, and physical needs.

If you would like more information or are feeling inclined to give to this cause you can find more information here:

In August we met Todd Thakar, CEO of Simply Water. Todd and his wife Angie see their marriage as a mission, and their aim is to empower 10 million people to change the world ny providing sustainable clean water access to communities, with a current focus on Nicaragua. In less than a year they have been able to celebrate raising over $60,000 for the cause.

If you would like more information or are feeling inclined to give to this cause you can find more information here:

October brought us Heidi Matzke, Executive Director of Alternatives Pregnancy Center. Heidi’s personal experience with her sister’s unplanned pregnancy inspired her to lead Alternatives, which remains a sanctuary of holistic care and support for women. The center provides patients with compassionate care, ministering in whatever gentle ways they can to patient’s physical, emotional, and spiritual needs. APC offers a comprehensive range of services at no cost to patients, including pregnancy tests, ultrasounds, prenatal care, well-woman visits, parenting classes, and so much more.

If you would like more information or are feeling inclined to give to this cause you can find more information here:

Economic Update

Solid gains for both stocks and bonds gave investors a November to remember. As financial markets continue to defy skeptics, I’m reminded of a quote from Warren Buffett’s long-time partner and one of the greatest investors of our time, Charlie Munger, who passed away last week. “The world is full of foolish gamblers, and they will not do as well as the patient investors.” We couldn’t agree more at LPL Research. Patient investors have been rewarded in 2023 and will continue to be.
Increasing confidence in a soft landing for the U.S. economy has shifted the focus away from rate hikes and toward eventual cuts, helping to pull long-term interest rates down and encouraging market participants to pay higher prices for stocks relative to expected earnings.
A good start to holiday shopping season supports the soft landing narrative. Online sales since Black Friday are up 5% over the same period last year according to Adobe. Lower prices at the pump, falling goods prices, higher stock values, and rising wages should help keep the momentum going.
The other key piece of the soft-landing equation, inflation, is well on its way to the Federal Reserve’s 2% target. Remarkably, the preferred inflation measure, the core personal consumption expenditures (PCE) deflator, rose at just a 2.2% annualized pace over the past three months, down from 5.3% in the year prior.
Looking ahead, we think the combination of corporate America’s solid fundamental foundation and the support from lower interest rates sets the stage for more stock gains in the coming year. The slowing economy will help ease inflation. Less inflation will help promote interest-rate stability. And earnings are entering their sweet spot following an excellent third quarter earnings season.
Sure there are risks. Some of the impact of higher rates is yet to come. Consumers have drawn down most of their excess savings. U.S. government debt is getting more expensive. Wars overseas have heightened geopolitical risk ahead of what will likely be a divisive 2024 U.S. presidential election.
But as Mr. Munger told us, patience will be rewarded. No one knows exactly what will happen through the end of the year, but history shows that stocks tend to produce above-average gains in December and rise much more often than they fall—even after strong gains the month prior. This would be a fitting end to what’s truly been a remarkable year.

Please reach out to me if you have any questions.

Sincerely,

David Laut
CEO, Certified Financial Planner™
O / 916-846-7780
A / 4180 Douglas Blvd. Suite 200, Granite Bay, CA 95746

DavidL@liveabound.com
www.liveabound.com

Important Information

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.

References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

All data is provided as of June 6, 2023.

Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities.
All index data from FactSet.

The Standard & Poor’s 500 Index (S&P500) is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

This Research material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.

There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.

Past performance does not guarantee future results.

Asset allocation does not ensure a profit or protect against a loss.

For a list of descriptions of the indexes and economic terms referenced, please visit our website at
lplresearch.com/definitions.

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