I hope you’re doing well and enjoying the start of Summer.

Below are a few interesting data points from the past month related to the stock market, real estate, and a reminder from The Millionaire Next Door. Hope you enjoy.

• 🌎 Country Stock Returns – Global stock market diversification is proving useful.

• May > 5%? – A fun stat to consider: “When the S&P 500 gains more than 5% in May (as it did this year) the next 12 months have never been lower and gained nearly 20% on average.”

• ⬇️ US Company Earnings May Decline – With the average tariff rate up from 2-3% a few years ago to ~18% today, analysts are making downward revisions to future earnings.

• 💲Profit Margins by Sector – An interesting look at how different sectors compare. Tech is the clear leader.

• 🛒 Walmart – This one surprised me. On a price-to-earnings basis, Walmart is more expensive than Microsoft, Amazon, Apple, and Meta.

• 📊 More Sellers Than Buyers – Redfin reports that home sellers outnumber buyers:

• ⚖️ Buyer’s Markets – From the same Redfin report, these are the top buyer’s markets

• 🏠 Housing Inventory Changes by State – The number of homes for sale across the U.S. is quite a bit higher than last year. As more supply comes online, you would think that would be beneficial to buyers.

• Housing Supply – An alternative view of the increasing housing supply nationwide:

• 🇺🇸 It’s Taking Longer to Buy A Home – The headline says it all: The median age of first-time home buyers has increased from 30 in 2008 to 38 today.

Life

• 💸 Reminders from The Millionaire Next Door – If you haven’t read this book I highly recommend it.

Quote of the Month

“A wealth of information creates a poverty of attention.”

– Herbert A. Simon

As always, please reach out if you have any questions or would like to connect.

With the historic amount of volatility in April, many are happy that month is behind us. A quick summary of the investment activity:

• The S&P 500 fell 10.6% over two days.

• It soon rebounded 9.5% — the third-best single day on record (!).

• U.S. stocks ended April down around ~1%. Quite the round trip.

On the trade front, tariffs are apparently postponed until July 8th. Right now, the market seems optimistic that those will not fully go into effect. I don’t see Trump walking away completely, but it feels like everyone is hoping that they’ll be minimized from the current plan. Perhaps we’re in a brief respite from the tariff-induced madness we just experienced, or perhaps the stock market is right, and the worst is behind us. Only time will tell.

It’s still early days in the China-US trade war, but the early data is worrying:

• China’s export orders have declined, and container ship bookings to the U.S. have dropped sharply.

• 👩‍🍼 Quick Tip: China produces a very large share of strollers, cribs, and toys sold in the America. If you or someone you know has a baby on the way, it’s smart to stock up on these essentials sooner rather than later.

• Businesses are pulling back on investment.

• Consumers are growing  anxious about unemployment, inflation, and general sentiment is low.

We’re also seeing an interesting trend with international investors: Foreign investors are on a “buyers’ strike” for U.S. assets, according to Deutsche Bank. This is showing up in a) the decline of the dollar, b) a sharp drop in overseas purchases of U.S. investments, and c) reduced international travel (at least from Europe) to the America. International attitudes toward the U.S. has declined, which is now showing up in the data.

As for interest rates, betting markets are pricing in two interest rate cuts this year. But it may be a tricky situation — tariffs are inflationary, so cutting rates in an inflationary environment is not the typical playbook. Plus, as we learned during the pandemic, rate cuts can’t fix broken supply chains, and may even add to inflation when goods are scarce.

In short: we’re a long way from calm waters. The stock market remains a strong early indicator of recovery, but right now, unpredictability is the only constant. To that point, around 40 companies have withdrawn or lowered their forward guidance for the year, citing economic uncertainty. Examples include General Motors, JetBlue, Kraft Heinz, and Logitech.

Please let me know if you have any questions or concerns about how your financial plan is being affected or how your portfolio is allocated.

Below I’ve summarized a few interesting data points from from the past month related to the summary above.

• 🫩 Nearly Flat – With all the volatility in April, the S&P 500 ended down 1%.

• 🌎 Country Returns – Going back to the start of 2025, the US is underperforming the international markets.

• 📈 Biggest 1-Day Gains – On April 9th the S&P 500 went up 9.5%.

• 🏠 Housing Inventory Up – The number of homes for sale across the U.S. is quite a bit higher than in recent years.

• 🇺🇸 State by State Inventory Growth – California in particular has seen a big increase in homes for sale.

• 🚢 GDP Down 0.3% in Q1 – GDP shrank 0.3% in the first quarter — the first drop in three years.

• 🛫 Europeans Traveling to America Less – Not a great sign for our tourism industry.

• 💵 US Dollar Down – The value of the dollar has declined ~8% since the start of this year.

• 👨‍💼 Job Worries – Many are concerned about losing their job. You have to go back to 2008 to see this level of fear.

• 💸 State Tax Changes since 2000 – An interesting look at how state taxes have changed since 2000. California has moved up quite a bit.

Quote of the Month

“Everybody in the world is a long-term investor until the market goes down.”

– Peter Lynch

As always, please reach out if you have any questions or would like to connect.

For many investors, index funds are the easiest and most effective ways to build long-term wealth. And for good reason — they offer:

1. Diversification. Index funds spread your money across hundreds, or even thousands, of companies, reducing the risk tied to any single stock.

2. Low Cost. Because index funds are passively managed, they typically have much lower fees than actively managed mutual funds.

3. Strong Performance. Index funds often outperform actively-managed funds, thanks in part to lower fees and consistent market exposure.

But what if you could get all those benefits, but with more control and additional tax benefits? That’s where direct indexing comes in.

You still get broad market exposure, but because you own each stock directly, it opens the door to some big benefits:

1. 🎯 Customization
If you would like to exclude companies or industries, that’s possible.

For instance, if you have pre-existing company stock, direct indexing can work around that holding — avoiding overlap or concentration risks, while still delivering broad market exposure.

2. 💰 Tax Efficiency
This is where direct indexing really shines. Even in years when the market goes up, many individual stocks decline:

Direct indexing allows you to sell those positions at a loss. We replace those positions with a similar company (e.g., selling MasterCard and replacing it with Visa), so the portfolio maintains a diversified profile.

The realized loss can then be used to offset gains from somewhere else, usually a highly-appreciated company stock. This strategy is called “tax loss harvesting,” and it helps improve your after-tax returns.

Is Direct Indexing Right for You?
Direct indexing is a good fit for those who meet the following criteria:

1. You’re in a high tax bracket.

2. You have large, unrealized gains (typically from a concentrated stock).

3. You have a sizable brokerage account ($500k+).

Frequently Asked Questions

1. How Much Does it Cost?
0.20% of the managed portfolio, per year. This fee goes to the portfolio administrator, not Think Different Financial Planning.

2. Does this work with stocks and bonds?
We only implement direct indexing for the for stock side of the portfolio.

3. Can this be done in a retirement account, like an IRA?
It can be implemented in a retirement account, but to get the full tax benefits, you would want to use this investment approach in an after-tax account, such as a brokerage, trust account, etc.

For many investors — especially those looking for a more personalized and tax-efficient way to invest — direct indexing is a compelling investment approach.

If you’re interested in learning more, please reach out.

This post will focus mostly on the current market volatility. Right now, investors are trying to make sense of a huge change to our trade policy.

Thursday and Friday’s trading sessions resulted in the 5th biggest 2-day decline for the S&P 500 on record, down 10.5%. Looking at the futures market, tomorrow looks like another big down day.

There has been extensive coverage on the immediate impact and potential outcomes. At this stage, I think it’s too early to determine how things will unfold, and what the short- and long-term effects will be.

My perspective (and hope) is that the tariffs are primarily a negotiating tool. Notably, just one day after announcing them, President Trump responded to a question about their negotiability by saying, “It depends. If somebody said that we’re going to give you something that’s so phenomenal, as long as they’re giving us something that’s good…the tariffs give us great power to negotiate.”(source)

• Discipline Funds – The author, Cullen Roche, is a brilliant economist. He’s anti-tariff, as most economists are, and point #2 from this blog explains why.

• Apricitias Economics – This was written right before the tariff announcement, but has a lot of great insight.

It’s times like these that remind us about the importance of diversification. We have to focus on what we can control: Our fees, our taxes, and – what’s highlighted most right now – our stock market risk.

The market has returned an average of 10% per year since 1928, despite an average intra-year decline of -16%. We’re at -17% right now. Unfortunately there is no upside without the occasional downside. It is the classic risk-reward tradeoff.

Things may get worse before they get better, but historically the biggest “up” days have clustered around the biggest “down” days.

Long-time clients know that I often refer to the 50% stock market decline that occurred in 2008-09. While I’m not predicting a repeat, Warren Buffett said it best: “Unless you can watch your stock holdings decline by 50% without becoming panic-stricken, you should not be in the stock market.” This is why most investors choose not to allocate 100% of their portfolios to stocks. And within individual stocks, the declines can be more extreme.

I completely understand the discomfort around the current market situation; It’s perfectly normal to feel uneasy. But it’s important to distinguish between discomfort and fear.

If you’re genuinely fearful, it’s probably a sign that your risk is too high. If that’s the case, please reach out.

What’s also an important tool is to rebalance your portfolio. That ensures that your portfolio remains inline with your risk profile.

The good news:

1. Bonds have acted as a ballast, performing well the past couple of days.

2. International stocks have outperformed US stocks since the start of the year. 

3. The tariff situation is self imposed. It is not a systemic shock, like Covid or the real estate crisis of 2008-09. They can be removed or reduced at a moment’s notice.

For further reading, I recommend the following article and advice:

• An Investor’s To-Do List for Chaotic Markets – Written by Christine Benz of Morningstar.

• Advice from Jason Zweig of The Wall Street Journal: “If you overhaul your entire portfolio in response [to what’s going on now], you aren’t just acting as if you know what the market is going to do next, which is close to impossible. You’re also acting as if you know what Donald Trump is going to do next—which is impossible.”

Below I’ve summarized a few interesting data points about the recent stock market decline, as well as some interesting points from the past month.

• 📉 Large 2-Day Declines – “The S&P 500 fell 10.5% over the last 2 trading days which was the 5th biggest 2-day decline since 1950.

• 🐻 Previous Bear Markets & Corrections – This chart illustrates that the long-term trend is up, but with many 10%+ declines along the way.

• ⑦ Magnificent 7 vs. S&P 500 – The Magnificent 7 are down ~15% since the start of the year (down close to 25% since this chart was created).

• 📊 A Bad Q1 Following an Election is Normal – From Ryan Detrick at Carson Research:

• 📈 The Best 15 Years On Record! – From 2010 – 2024, the S&P 500 has performed better than any other 15-year period going back to 1970, returning 12.2%. A remarkable run.

• 📉 IPOs at a Low – Since 2000, about 100 companies per year have gone public. Recently, we’ve been way below that. The recent volatility is likely to push more companies to wait it out for calmer times.

Real Estate

• 💵 Housing Prices During A Recession – An interesting look at nationwide home prices during recessions. Aside from 2008-09, they’re remarkably stable and positive.

• 🏡 Days on Market –  From The Wall Street Journal:

• ↕️ Year over Year Home Price Growth / Decline – San Jose leads the nation in home-price appreciation over the last year.

Apple

• 📱 Apple’s Growth & Valuation – I thought this was an interesting take on Apple from Scott Galloway.

Quote of the Month

“What you learn from history is that the market goes down. It goes down a lot.

The math is simple. There’s been 93 years this century. The market has had 50 declines of 10% or more…about once every two years, the market falls 10%…

…Of those 50 declines, 15 have been 25% or more. That’s known as a bear market…So every six years you’re going to have a 25% decline. That’s all you need to know. You need to know the market’s going to go down sometimes.”

– Peter Lynch, 1993

As always, please reach out if you have any questions or would like to connect.

The U.S. stock market is about 6% below its all-time high. Recent discussions around tariffs and their potential economic impact have sparked concern with quite a few clients, so I wanted to take a moment to share some perspective. 

Since tariffs are self imposed, their impact will hinge on their duration. A swift removal would likely result in a minimal impact, but if they remain in place for months, the negative repercussions (particularly for the auto sector) are likely to be significant.

While the recent stock market movement might be worrisome, it’s worth keeping in mind that the average intra-year decline for U.S. stocks is about 14%. We did not see that level of decline in 2023 or 2024, but that will not last forever.

Notably, large U.S. tech companies have experienced a sharper decline than the broader market. Here’s a snapshot of some of the biggest companies (as of 3/4/25):

• Tesla: Down 44%
• Nvidia: Down 24%
• Alphabet: Down 17%
• Microsoft: Down 17%
• Amazon: Down 16%
• Apple: Down 9%
• Meta: Down 13%

These fluctuations are a reminder of the inherent volatility of individual stocks, but they don’t necessarily signal a need to act. That said, your peace of mind is my top priority. If you’re feeling uncertain about your portfolio, or have questions about your broader financial plan, please don’t hesitate to reach out. I’d be happy to discuss your goals and how we’re tracking toward them. 

Below, I’ve also summarized a few interesting data points from the past month. Hope you enjoy.

• Many Anticipate a Stock Market Decline – Every week since 1987, the American Association of Individual Investors has surveyed investors on how they feel about the stock market. As of last week, bearish sentiment moved above 60% for just the sixth time in history. 

• Inflation Rising? – If I had to pick one area to worry about, it would be inflation.

 International Stocks Doing Well – Many international stock markets are outperforming the U.S., a reminder of the benefits of global diversification.

As a whole, from January 1st – February 28th, the US stock market is up 1.1%, whereas international stocks are up 5.6%. Some individual country market highlights below:

• • • Tech Taking Over – Big US tech companies have performed great for years. As a result, their weighting in the S&P 500 has moved above 30%, a level not seen since the late 90s.

• •  IPO Timeframe – The average time it takes for a company to go public has moved up over time, and is currently ~14 years.

Real Estate

•  Rent vs. Buy – If you’re comparing renting a home versus buying, this is a good calculator to help you run the numbers.

• Add Your Trust to Your Insurance – Following up on last month’s article about home owners insurance, another tip: If you have a trust, add it as the “additional insured” for your home owner’s and car insurance policies.

•  “U.S. Homes Sales in 2024 Fell to Lowest Level in Nearly 30 Years” – “U.S. existing-home sales fell in 2024 to the lowest level since 1995, the second straight year of anemic sales due to stubbornly high mortgage rates.” There were more homes sold in 2008 and 2009 than in 2024:

•  Not Many Homes For Sale – The number of homes for sale has been trending down for a while. This limited supply is certainly a factor in keep prices at all-time highs:

Life

•  Least Delayed Airlines – In case you’re booking flights any time soon:

Quote of the Month

“The key to making money in stocks is to not get scared out of them.”

– Peter Lynch

I hope you found these interesting.

As always, please reach out if you have any questions or would like to connect.