ABF-LIFE-October-2023-header

LIFE Newsletter October 2023

We’re excited for what’s ahead

This year it is important to us to shift to producing content that we resonate with. One of the biggest changes for our Life Newsletter will be highlighting organizations that we will be supporting this year. Each charity we highlight will receive a $500 donation from Abound Financial.

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

Life Lessons

“Precious treasure and oil are in a wise man’s dwelling, but a foolish man devours it.”
Proverbs 21:20 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. Stock valuations are not attractive at such high yield levels in the bond market.

  • The Committee favors large cap stocks over their smaller brethren ahead of a likely economic slowdown toward the end of the year.

  • Style views remain neutral overall. Our technical analysis work points toward growth, but valuations support value.

  • The STAAC’s regional preference remains developed international stocks over the U.S. and emerging markets (EM) due largely to valuations and better corporate governance in Japan, though recent economic weakness and waning relative strength in Europe are concerning.

  • 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 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

This month we would like to introduce Heidi Matzke, Executive Director of Alternatives Pregnancy Center.

Heidi Matzke, pictured in Sacramento, California

Heidi Matzke is the Executive Director of Alternatives Pregnancy Center, a women’s health clinic in Sacramento, California. Founded in 1983, Alternatives Pregnancy Center stands as a beacon of hope and support, offering women free medical care and compassionate alternatives to abortion while also sharing the message of the Gospel.

Heidi’s journey into this role began with a deeply personal and emotional experience. On the day she and her sister were set to leave for college, her sister showed up at her door and collapsed on the ground, telling Heidi “I’m pregnant”. Heidi said “I saw the fear in her eyes. I see that fear almost every single day in the eyes of the women who come into our center. They need help, they need someone to talk to, and they need hope. I know, because my sister needed all of those things. Our family needed all of those things. And we found them in a local pregnancy care center. Years later, because I wanted to give that same help and hope and support to others, I became the director at Alternatives.”

As an organization primarily composed of women serving women, Heidi and the staff at Alternatives provide patients with compassionate care, ministering in whatever gentle ways they can to patients’ physical, emotional, and even spiritual needs. They offer a comprehensive range of services at no cost, and last year provided over two million dollars worth of free medical services. From pregnancy tests to ultrasounds, prenatal care to well-woman visits, the center is a sanctuary of holistic care. The staff, many of whom have experienced abortion themselves, approach each patient with empathy and sensitivity. The clinic’s offerings extend beyond medical services, encompassing everything from STD testing and treatment to abortion pill reversal services and parenting classes. If finances are a problem, they go as far as helping to provide essential items like diapers, wipes, formula, baby clothing, and more, all free of charge.

Heidi’s dedication is a testament to her unwavering belief in providing support, resources and genuine care to women facing the profound challenge of an unplanned pregnancy. Through her leadership, Alternatives Pregnancy Center remains a steadfast sanctuary, where women are met with love, understanding and the promise of hope.

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

Economic Update

The S&P 500 lost 3.3% in the third quarter after sliding nearly 5% in September. Putting this into perspective, nothing really qualifies as out of the ordinary. Since 1950, the S&P 500 has historically declined in September 55% of the time, posting an average decline of 3.8%. September has certainly lived up to its reputation as being a weak seasonal period for stocks. The main culprits were rising interest rates and government shutdown fears.

Whether your goal is growth, value, or probably some combination of the two, there wasn’t a difference in performance between the two (on the Russell 1000 indexes). Stocks in both investing styles generated nearly identical total returns during the quarter. Growth, however, still maintains its more than 11 percentage point year-to-date gain over value.

Energy was by far and away the top performing sector last quarter and the only sector up on the month. The sector has benefited from higher oil prices and increasingly more shareholder-friendly producers. At the other end of the spectrum, real estate and utilities struggled with 9.7% and 10.1% quarterly declines, respectively, as rising interest rates challenged income-oriented sectors. The U.S. slightly outperformed the developed international markets while emerging markets held up slightly better despite the strong U.S. dollar.

Moving onto the economy, we’re feeling the ripple effects as higher short-term interest rates flow into our daily lives— in business and consumer interest rates. For example, would-be homebuyers saw the average 30-year fixed rate reach a 23-year high at the end of last month. Remember, the Federal Reserve (Fed) raised short-term interest rates in an effort to slow the economy and halt inflation, which we are starting to see.

Given the economic backdrop, we wouldn’t be surprised if the markets remain a bit choppy this month. In addition to that, October can be bumpy anyway and of course, the prospect of a government shutdown looms in another six weeks. But overall, we suggest staying the course, and there are plenty of reasons to be cautiously optimistic about where we’re headed:

  • The labor market shows signs of moving in the right direction, with more balance between the supply and demand for workers.
  • Inflation is coming down. The Fed is most likely done with its aggressive rate-hiking campaign, which is good news for investors and policymakers alike.
  • The fourth quarter is historically the best quarter for the S&P 500, with average gains around 4.2%.

Underscoring these reasons for staying invested is how difficult it is to time the market, despite some of the risks at hand. Plus, opportunities in high-quality fixed income (e.g. U.S. bonds, corporate bonds) are as attractive as they’ve been in decades. All in all, October can be volatile, but there’s probably no need to get spooked by bouts of higher volatility.

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.

Related Posts from Abound Financial

Find a retirement planner in your area

learn more abound blog

Recent Posts