Kovitz Newsletter 3Q24
MARKET INSIGHTS
If you are expecting a bold prediction on the future of AI and its impacts on businesses and financial markets, I would hope you have read enough of these communications by now to know that it is not a game we believe is beneficial to play. Whether AI turns out to be a revolution or simply an evolution, the fact of the matter is that the key to a successful long-term financial plan is to avoid both complacency and fear in all environments. Change is a constant, and the course of action most likely to harm your financial health is to overreact – in either direction – to the perception that change is a new variable previously unaccounted for.
CORE EQUITY COMMENTARY
Markets are designed to make you feel uncomfortable: uncertainty and the associated volatility is exceedingly disconcerting. But learning to live – and thrive – despite this discomfort is one of the critical factors in generating substantial long-term compounded returns. Regardless of the accompanying volatility, ignoring the vicissitudes and vagaries of an economical reporting cycle must supersede the urge to give in to the folly of attempting to time the market’s ups and downs, which most often serves only to disrupt the inevitable long-term upward trend of equity markets.
FIXED INCOME COMMENTARY
A new chapter in the bond market began in September when the Federal Reserve officially turned the page on an era of restrictive policy by cutting the target fed funds rate 50 bps, from 5.5% to 5%. This rate cut is part of a broader effort by the Fed to balance its goal of controlling inflation while maintaining strong employment levels. With the Fed guiding toward another 175 bps in cuts through 2025, this move is seen as the start of a longer easing cycle, which could have significant implications for bond markets.