Offit Advisors On The Road
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In April, Principal, Ben Offit visited various clients in the Southeast along with Ann Hoover joining via Zoom. During the trip, Ben got to stay with long time teammate Barbara Owens at her home in North Myrtle Beach, South Carolina. During the trip they both got to exercise on the beautiful beaches at 7 AM in the morning. See picture above.
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proACTION℠ Planning Series
Episode 6 | Sorting Through Your "Junk Box"
Simplifying your Financial Life
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Join Ben Offit, CFP®, for Episode 6 of the proACTION℠ Planning Series, where he discusses how Offit Advisors can help you organize your financial life.
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“Can't put into words how much
we appreciate you both!!!”
– Susan
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Leona Helmsley, widely dubbed the "Queen of Mean,” said, "We don't pay taxes. Only the little people pay taxes." And in a fitting bit of chronology, the judge ordered her prison sentence to start on April 15.
Time & The History Channel
In 2021, India exported more in software ($133 billion) than Saudi Arabia did in oil ($113 billion).
Level Up, February 6, 2022
“I am not worried about the deficit. It is big enough to take care of itself.”
Ronald Reagan
Gwyneth Paltrow not only won the $1 she requested in her countersuit against Terry Sanderson, but she also won the internet. Why was the trial so viral? Mainly because it produced so many soundbites that seemed like they were lifted from a White Lotus episode skewering the wealthy and aloof. After being asked how the crash inconvenienced her, Paltrow told the courtroom, “Well, I lost half a day of skiing.” Sanderson’s witnesses said that following the crash, he was unable to enjoy wine tastings.
Morning Brew, March 31, 2023
Lincoln died. The Titanic sank, Ray Crock started McDonald's, and Babe Ruth hit his first home run, all on April 15th.
Brainy History
A blended study of 105,000 headlines and 370 million impressions concluded that “each additional negative word” in a news headline increased the click-through rate by 2.3%.
Nature Human Behavior, March 16, 2023
“When you understand every opinion is a vision loaded with personal history, you will start to understand that all judgment is a confession.”
Nikola Tesla
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Mixed Markets See Large-Caps and Bonds Advance; SMID Declined
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Highlights
- Concerns around regional banks caused stocks to slump and volatility to rise in the middle of March, but from that point on, equities have advanced, and volatility has declined through April.
- The VIX Index, a measure of stock market volatility, rose to just below 30 on an intraday basis in mid-March, but it moved steadily lower from that point. It closed April at 15.78 – a 52-week low.
- Large-cap stocks made gains in April, while small and mid-cap companies declined. International stocks were mixed as well with developed markets posting gains, but emerging markets sliding lower.
- The yield on the 10-year U.S. Treasury closed April at 3.44% compared to March’s close at 3.48%. With the exception of municipal bonds, fixed income markets advanced in April.
- Outside of the job market, economic data continued to show slowing activity. However, inflation readings also continued to improve in April, which could move the Fed toward the end of this rate hike cycle soon.
Equity Markets
In a modest change to the recent trend, large-cap value stocks outperformed large-cap growth companies in April, but the trend of large-caps outperforming small and mid-caps persisted during the month. Developed international stocks gained, but emerging market equities fell in what was a disperse return environment in April. See Table 1 for equity results for April and year to date.
Table 1
| Index |
April 2023 |
YTD 2023 |
S&P 500 |
1.56% |
9.17% |
| S&P 500 Equal Weight |
0.34% |
3.28% |
| DJIA |
2.57% |
3.53% |
| Russell 3000 |
1.07% |
8.32% |
| NASDAQ Comp. |
0.07% |
17.12% |
| Russell 2000 |
-1.80% |
0.89% |
| MSCI ACWI ex U.S. |
1.74% |
8.72% |
| MSCI Emerging Mkts Net |
-1.13% |
2.78% |
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Source: Bloomberg For illustrative purposes only. Indexes are unmanaged and have been provided for comparison purposes only. No fees or expenses are reflected. You cannot invest directly in an index.
The S&P 500 Index posted a solid gain of 1.56% in April but looking at the S&P 500 on an equal-weighted basis showed the average stock only gained 0.34%. Recall the S&P 500 Index is a market-cap weighted index and is becoming more and more dominated by mega-cap Technology companies. Those mega-cap Technology companies have done better than the average stock and by quite a significant margin when looking at year-to-date results.
The tech-heavy NASDAQ Composite was only modestly higher in April but still has the strongest results so far this year. Meanwhile, the Russell 2000 Index, a measure of small-cap companies, continued to struggle in April and the strong gains at the start of the year have been largely wiped out with recent weakness in this space.
On a year-to-date basis, significant divergences existed in the stock market. Large-cap growth stocks have been the clear winner so far in 2023. Despite gaining only 0.99% for the month, the Russell 1000 Growth Index was up 15.49% for the year to date. By contrast, the Russell 1000 Value Index gained a modestly better 1.51% in April, but it stands with a year-to-date gain of only 2.53%. Growth performed modestly better than value on a relative basis in small and mid-caps in April. However, small and mid-caps were both down during the month regardless of style as large-cap performance dominated the month and year to date.
Fixed Income
Yields have been on a roller coaster ride so far in 2023. In January, yields dropped rather sharply, but February saw yields rise dramatically as some inflation readings were “hot” and concerns grew that the Fed might need to raise rates even higher than previously expected. Equally as dramatic was the drop again in yields in March as there was a flight to quality with concerns about some regional banks. In contrast, April was somewhat calm as yields finished April only modestly lower compared to March. (Not to say there was not some volatility during the month itself.) The 10-year U.S. Treasury closed March at 3.48% and April at 3.44%. Interestingly, the 30-year U.S. Treasury yield closed March and April at an identical 3.67%. Outside of the 1-month T-Bill, shorter-term rates (1-year and under) generally rose in April, but longer-dated bond yields generally declined. The inversion of the yield curve continues. Please see Table 2 for fixed income returns for April and YTD.
Table 2
| Index |
April 2023 |
YTD 2023 |
Bloomberg U.S. Agg |
0.61% |
3.59% |
| Bloomberg U.S. Credit |
0.79% |
4.26% |
| Bloomberg U.S. High Yield |
1.00% |
4.60% |
| Bloomberg Muni |
-0.23% |
2.54% |
| Bloomberg 30-year U.S. TSY |
0.16% |
6.16% |
| Bloomberg U.S. TSY |
0.54% |
3.56% |
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Source: Bloomberg. For illustrative purposes only. Indexes are unmanaged and have been provided for comparison purposes only. No fees or expenses are reflected. You cannot invest directly in an index.
We believe the move higher in rates in 2022 has largely run its course at the longer end of the yield curve and we expect the 10-year yield to move lower as we go through 2023. While volatile, that has occurred so far in 2023 with longer-dated yields declining, which has set up a better return environment for bonds. In previous Fed rate hike cycles, longer rates have started to come down before the Fed has stopped raising the Federal Funds rate and that pattern has played out this year as well.
We maintain our opinion that we are in the late innings of this rate hike cycle. We also maintain our long-standing position favoring credit versus pure rate exposure in this interest rate environment. Municipal bonds have been somewhat expensive on a relative basis, so weakness in this part of the market was not unexpected in April. Finally, we believe the role bonds play in a portfolio, to provide stable cash flows and to help offset the volatility of stocks in the long run, has not changed.
Source: Clark Capital Benchmark Review, April 2023
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S&P 500 Index is an unmanaged group of securities considered to be representative of the stock market in general. You cannot directly invest in the index.
Dow Jones Industrial Average - The Dow Jones Industrial Average is a popular indicator of the stock market based on the average closing prices of 30 active U.S. stocks representative of the overall economy.
NASDAQ Composite Index measures all NASDAQ domestic and international based common type stocks listed on The NASDAQ Stock Market. Today the NASDAQ Composite includes approximately 5,000 stocks, more than most other stock market indices. Because it is so broad-based, the Composite is one of the most widely followed and quoted major market indices.
Russell 2000® Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index, which represents approximately 8% of the total market capitalization of the Russell 3000 Index which includes the 3,000 largest companies in the U.S., based on market capitalization. As of the latest reconstitution, the average market capitalization was approximately $762.8 million; the median market capitalization was approximately $613.5 million. The largest company in the index had an approximate market capitalization of $2.0 billion and a smallest of 218.4 million.
Russell 1000® Growth Index measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values.
Russell 1000® Value Index measures the performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values.
Government bonds are guaranteed by the U. S. Government and, if held to maturity, offer a fixed rate of return and fixed principal value.
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Securities offered through Kestra Investment Services, LLC (Kestra IS), Member FINRA/SIPC. Investment Advisory Services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Offit Advisors is not affiliated with Kestra IS or Kestra AS. Offit Advisory Services, LLC is a tax firm but neither Kestra IS nor Kestra AS provide legal or tax advice and are not Certified Public Accounting firms.For more information on the Five Star Wealth Manager and the research/selection methodology go to: www.fivestarprofessional.com. Investor Disclosures: https://bit.ly/KF-Disclosures
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