Carlson Quarterly – Q4 2023

December 31, 2023

Market Commentary

A request for reduced borrowing needs by Yellen’s Treasury quickly followed by a shift in tone regarding additional FOMC rate hikes by Jay Powell led to a massive Q4 rally in stocks to end 2023. The S&P 500 rallied for nine straight weeks and ended the year up 24.23% (+26.44% with dividends) while QQQ ended the year with a staggering 55% rally led by the Magnificent-7 which averaged a gain of 104.7% and to contributed 62% of the S&P 500 gain. The market shrugged off concerns of recession and inflation as the indexes raced to challenge all time highs. A softer U.S. dollar and a decline in interest rates also help fuel the fire in equities and sentiment towards risk assets. Small caps were laggards for the year, as the Russell 2000 returned only 15%, a significant underperformance versus the large cap S&P 500 despite a Q4 surge. Crude oil was weak in the fourth quarter, allowing gasoline prices to weaken, another positive for stocks and the consumer. Next up in 2024 are Q4 earnings and predictions about the Presidential election, but strength begets strength and it will be hard to slow this market down.

Advice Corner

Explore our 4th Quarter articles for advice and insights on selecting an RIA, the bond market, starting a budget, charitable giving, tax-wise investing and HSAs/Flex spending accounts.

  • Bonds Are Back: Your Primer on The Bond Market – Bonds can be a great tool if you’re looking to balance your portfolio by diversifying your investments and reducing volatility. But how do they work? And what kind of bonds are best for your profile? Many investors get overwhelmed with bond terminology, which drives them away. However, when you understand a few key terms, you’ll see how simple they are and how to make them work for you.
  • How To Start a Budget: Because Budgeting = Awareness! – While budgeting seems very constraining, knowing where your cash goes can also be viewed as an awareness practice. Consider that even the super-wealthy take the time to generally understand their cash flows. There are several ways to track your spending, from basic methods to technologically advanced options. Explore some options and tips on budgeting in our article.
  • Qualified Charitable Distribution (QCD): What Is It + How Does It Work? – Part of planning for retirement is considering your IRA distributions and management. One tool that can offer significant savings and tax benefits while allowing you to do good is a qualified charitable distribution (QCD), a direct transfer from an IRA account made payable to a qualified 501(c)(3) charity. Read our article for a breakdown of what a QCD is and how it works!
  • Tax-Wise Investing in Your Regular Taxable Brokerage Account – We all know there are two guarantees in life: death and taxes. The government inevitably receives some form of tax revenue from your investments. There are two types of taxes levied upon the sale of a security (i.e., stock, bond, mutual fund, or ETF), known as long-term and short-term capital gain taxes. Take a closer look at capital gains and a few tips for building a tax-wise investment strategy.
  • HSA vs. FSA: Which Medical Spending Account Is Right for Me? – The end of the year is approaching, which means it’s time to start making many important financial decisions for 2024. This will likely include evaluating benefits you receive from your employer, and there’s one perk that many individuals overlook: tax-advantaged medical spending accounts. While not all employers offer flexible spending accounts (FSAs) or health savings accounts (HSAs), if yours does, it’s worth considering. Examine FSAs and HSAs and the differences between each in our article.

For more information, contact the Carlson Team today!

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