Onto the investment world, below are some interesting personal finance stories and themes from November, plus a few year-end tax-saving tips.

• Tax-Loss Harvesting – If you have any investments that you’re not attached to, and are sitting on a loss, selling those is worth considering. That loss can offset gains from other stocks. And if your total losses exceed your total gains, you can deduct up to $3,000 of the losses against your income, which reduces your taxes. Any excess losses are carried forward to future years.

• Max Out 401(k)’s – If it’s part of your financial plan to max out your 401(k), make sure you do so by year end. Also, consider after-tax 401(k)’s if your company offers them and you don’t need as much cash from your paycheck.

• Maximize HSA Contributions – For clients with high-deductible health plans, contribute the maximum allowed to your HSA before year-end ($4,150 for an individual, or $8,300 for a family). Contributions are tax deductible, grow tax free, and can be withdrawn tax free if used for qualified medical expenses.

• 🤕 Underperformance – The vast majority of funds underperform their benchmark. Over a 10-year time horizon, 87% of funds focused on the US market fail to beat their benchmark.

• 📊 S&P 500 Year-to-Date Return Breakdown – Nvidia has driven ~25% of the S&P 500’s return this year. Meta, Amazon, Apple, and Google have also been big contributors.

• 🐂 Bullishness – The largest share of Americans on record believe the stock market will continue to do well over the next year.

🤔 Maybe They’re Right? – The S&P 500 is on course to be up more than 20% in 2023 and 2024.

Those types of back-to-back gains have occurred before. In those instances, the average gain in the third year is about 12%:

• ⚖️ On the Other Hand… – Many followers of Warren Buffett are wondering if he’s turning bearish (i.e., cautious).

• 💸 Venture Capital – 2023 was venture’s worst year of profits since 2011. Initial public offerings, private equity buyouts, and mergers are all down:

• 🇺🇸 US = More Productive – A great stat from Joseph Politano: “Since late 2019, the US has seen more than double the productivity growth of the next-fastest major comparable economy, building on an already significant lead it built up in the years before COVID.”

• 🏠 First Timer Buyers are Rare – 24% of homes purchased are bought by first-time homebuyers, a record low. This largely relates to interest rates and high housing prices, which makes buying difficult.

Life

• ☑️ Estate Planning Checklist – If you’re thinking about estate planning, the checklist below might be of interest:

“It is not that we have a short time to live, but that we waste a lot of it. Life is long enough, and a sufficiently generous amount has been given to us for the highest achievements if it were all well invested.”

– Seneca

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

• 📈 The Best 6 Months – November through April has historically been the best six-month stretch for the US stock market, rising 77% of the time for an average gain of +7.1%.

• 📉 If You’re Worried About a Stock Market Decline – This article covers 5 questions to think through.

• 🇨🇳 China Rally – From Charlie Bilello, “In the span of a few weeks, China went from being one of the worst performing stock markets in 2024 to #1.”

Economy & Jobs

• 💵 American Exceptionalism – Some good data points from an excellent piece in The Washington Post, This is a great economy. Why can’t we celebrate it?

• 🏡 The Poor Get Richer – In more good news, the poorest half of Americans have basically doubled their wealth since 2019:

• 🇺🇸 America’s Economy is Doing Great (But Most People Don’t Feel That Way) – For more great stats about how well the American economy is doing, I suggest this article from Ben Carlson, The New Normal of Negativity.

• 🏥 Healthcare Costs – Some unfortunate news about healthcare inflation: “The cost of employer health insurance rose 7% for a second straight year.”

• 🤔 App to Help You Choose a Healthcare Plan – Speaking of healthcare, it’s open enrollment season. If you have questions about which healthcare plan is the right fit, Sheer Health will help you analyze and select a health insurance plan.

• 🏢 Return to Office Rates – About two-thirds of office workers work from home on Friday’s. Tuesday is the most popular in-office day.

• 🛫 Inflation by Decade – The 2010s (in blue) had extremely low inflation.

Housing

• 💡 Thinking About Energy-Efficient House Improvements? – Check out this link to see what you qualify for.

• 🏠 Save on Property Taxes! – File this simple form, the Homeowner’s Exemption, to reduce your homes assessed value by $7,000. This should save you about $75 per year for only a few minutes of work:

• San Mateo County
• San Francisco County
• Santa Clara County
• If your county isn’t listed, just search “(county name) + homeowner’s exemption”

• Homeowner’s Insurance Tips – With Hurricane Helene ruining many homes and lives, there’s renewed interest in home insurance. Here are some helpful tips from The Wall Street Journal:

• “If your policy won’t pay enough to rebuild your home from the ground up—at today’s costs—as well as to replace your personal property, such as furniture and clothing, then you are underinsured.”
• “While most homeowner insurance policies include replacement-cost coverage for personal property, that may not apply to the home itself.”
• “For condos: Be sure to review the governing documents of the association to determine the extent of your responsibility to rebuild if there is a casualty loss. Typically, unit owners are responsible for rebuilding the interior of their units, while the condominium association will rebuild the structure of the building.”

• Rent vs. Buy – I’ve noticed the same math across California:

• 🔑 Few Home Sales – The number of existing-home sales dropped 1.0% from August to September, to a seasonally adjusted annual rate of 3.84 million:

Life

• 💳 The Buying Power of Your Credit-Card Points Is Tanking – From The Wall Street Journal, “A point redeemed in a portal has long been worth about 1 cent, according to the credit-card issuers, and a penny has lost about 20% of its purchasing power since 2018….Practically, this means that if you accumulated 50,000 Capital One points in 2020 and still haven’t spent them, they are now worth about 41,300 points within the bank’s portal.”

• 🔋 Used Electric Cars are Cheaper than Used Gasoline Cars – There are great deals on both new and used electric cars.

• 💵 How Assets are Distributed Across Wealth Levels – Wealthy people have the majority of their assets in (usually their own) business.

Quote of the Month

“Get out of ‘save a nickel’ mode. Get into ‘make a buck’ mode.”

– Adam Carolla

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

• Stock markets finished the quarter strong, as the S&P 500 returned 5.9% and set its 43rd all-time high for the year.

• The Federal Open Market Committee (FOMC) cut interest rates for the first time since the rate increases began in March of 2022. The lending rate was reduced by 0.50%, to a range of 4.75% – 5.00%.

• Investors welcomed the FOMC’s larger-than-anticipated cut, and “risk-on sentiment” took hold in the final weeks of September. However, the upcoming U.S. election in November may add uncertainty and volatility to the markets as investors weigh the outcomes of differing policy positions.

• Market Cap Diversification is key when it comes to balancing risk and opportunity. The mega-cap tech stocks have done a lot of the heavy lifting in recent years, but leaning too heavily on them comes with its own risks. The third quarter reminded us of that, with a rotation into small- and mid-cap stocks, along with value sectors. This is why keeping a diversified portfolio across different market caps and styles is so important—it helps you capture opportunities when the market shifts.

• Global Diversification is crucial for investors looking to reduce concentration risk and tap into different economic cycles around the world. While the U.S. has been a growth leader, Europe and Asia have their own opportunities that can help balance out a portfolio. As monetary policies and economic conditions shift globally, these regions can offer potential gains and a more well-rounded approach to investing. It’s all about capturing those international opportunities while keeping your risk in check.

• Bonds are a crucial piece of the puzzle in balanced portfolios, especially when markets get shaky. With central banks starting to cut rates, bonds stand to gain from falling yields, making them an attractive option for generating income. Plus, their lower correlation to equities means they can help smooth out the bumps in your overall portfolio. In uncertain times, having that stability from fixed income can make all the difference.
  

1. 1. Data from Morningstar. Returns over one year are annualized
   2. Data from Morningstar.
   3. Data from Morningstar.
   4. Data from Morningstar.
   5. FactSet, Goldman Sachs, GIR
   6. Russell Investments

• 📈 The Everything Rally – Every asset class is positive: US and international stocks, US and international bonds, real estate, commodities, Bitcoin, and cash.

• 🎃 Choppy October? – Heading into October, the S&P 500 is up 20.8% for the year.

Investing / Stock Market

• 💵 Warren Buffett Sold Some Apple Shares. Should You? – An article from me about taking some chips off the table, especially when one position is 50%+ of your portfolio.

• 🤩 Best Week of the Year – In September the S&P 500 had its best week of the year, up 4% in 5 days.

• 📉 Rate Cuts – They usually lead to good 1-year returns.

• 💰 A Great Start – From Charlie Bilello: “The 20% gain in the S&P 500 is the best start to a year since 1997 and 17th best in history.”

• 🔥 Unprofitable Companies – We’ve all heard about startups that aren’t profitable. Many publicly traded companies aren’t either (especially the smaller ones):

• 🌎 Global Stock Performance – Taiwan, Argentina, and Turkey lead the world with the best performing stock markets this year.

Jobs & Economy

• 🐢 Economic Summary – It’s hard to summarize our economy better than this (from Torsten Slok of Apollo):

• 🔮 Interest Rate Expectations – The market expects interest rates to decline through 2025.

• 🚛 Moving Patterns for Young, High Earners – SmartAsset ranked states based on the net migration of young households (ages 26 to 35) that earned at least $200,000 a year.

• Software Engineer Job Postings in Decline – Postings for software development jobs are down more than 30% since February 2020.

• 🏢 New Business Formation Up Big – The number of small businesses being formed had been relatively flat for decades. But four months into the pandemic, the rate of new small businesses spiked and hasn’t let up:

• 🚙 Car Insurance Up 50% in 5 years.

Housing

• 📈 Inventory Surge – In August, the number of homes for sale jumped 35.8% year-over-year, marking the 10th consecutive month of rising inventory.

• 🏠 Everyone’s Favorite Investment – A new survey showed that real estate remains the top choice for long-term investment.

• 📊 Great Returns – Why housing is most people’s favorite investment is clear: The returns are rarely negative, it offers a lot of tax benefits, it allows for a lot of leverage, and it’s in DNA of America as owning a home is part of the American Dream.

• ⛈️ Homeowners Insurance Costs – About 60% of homeowners pay less than $1,500 per year for insurance.

Life

• 🚘 Searching For a New Car? – Check out Real Car Tips. They have great information about lease or purchase deals available from all the big brands.

• 🚶‍♂️‍➡️Life Path – The image below is a nice way to think your past and your future.

Somewhat related to the life path image above:

“You can’t change your past, but you can reframe it.

Find the lesson in it. Find the opportunity in it. Pull the teachable moment out of it and share with others.

You can’t choose your history, but you can choose the story you tell about it.”

– James Clear

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

The Important Point: Buffett has called Apple “probably the best business I know in the world.” Despite this, he took gains off the table, offering lessons for individual investors:

1. Portfolio Rebalancing: Buffett’s move reduced Apple’s outsized impact on Berkshire’s value. When one stock dominates your portfolio (20%, 30%, or 50%+), it’s worth asking: How much is too much?

2. Taxes: Buffett noted Berkshire is paying a 21% federal tax on its Apple gains, down from higher historical rates. He thinks higher taxes could return, something individual investors should factor in to their own decisions.

3. Valuation: Apple’s growth has made it expensive across metrics like price-to-earnings and price-to-sales. Buffett’s sale does not mean a lack of confidence in the company, the stock is simply not a discount anymore.

The Bottom Line: Despite a sizable sale, Buffett praised Apple at Berkshire’s 2024 meeting and plans to keep it as Berkshire’s largest position. His decision highlights the importance of strategic portfolio management—not a loss of faith in Apple’s long-term prospects.

Below are a few interesting personal finance pieces from August, plus a quick note about September so far:

The S&P 500 is down about 4% just a few days into September. From an investor perspective, September and October are on average the worst months (but still up 50% of the time).

If you’re investing for the long term, there is nothing to worry about these short-term declines.

Here are a couple charts to help put it in perspective:

• Global Returns – So far this year the US and international markets have done well:

• Best Performing Stocks – Within the US, NVIDIA is the best performer this year (more on NVIDIA below):

• Worst Performing Stocks – On the flip side, Intel (which is in the same industry as our best performer NVIDIA) is the worst performer this year:

• New Jobs – Most people are working in jobs that didn’t exist in 1940.

• Tech Job Postings – Tech job postings are down ~50% since 2020:

• Headcount is Down – With interest rates up, venture capital funding is harder to raise. As a result, startups are running leaner across all stages.

• VCs Love AI – “AI and machine learning startups made up nearly half of all investment, up from 15% in 2017.”

• VC Funding – Venture Capital investment peaked back in 2021.

• Large Companies on AI – Speaking of AI investment, it’s interesting to read what the big companies are saying about that expense:

Housing

• Interest Rates – have dropped to a 15-month low.

• Revised Home Buying/Selling Rules – Starting August 17, new rules were rolled out that slightly changed the way Realtors get paid. Here’s an overview:

• • • How It Worked Before: A 5%–6% fee was typically paid by the home seller and split between the seller’s agent and the buyer’s agent.
  • • For example, if a home sold for $1,000,000 the seller would be responsible for paying $60,000 (6%) to both agents.

• • • How It Works Now: As a buyer, you have to sign a contract with the agent representing you before they show you a property.
  • • The contract outlines the compensation your agent will receive, and is designed to inform buyers that they are responsible for paying their realtor if the seller chooses not to cover the cost.

• Home Sales Are Down – Housing activity is at a low.

• Home Price Appreciation – Prices are up across the country. The Southeast looks to have done the best:

• Is NVIDIA Overvalued? – If you’re interested in the share price of NVIDIA, I highly recommend this article.

• Apple’s Valuation – Apple’s price to sales ratio is quite high.

Quote of the Month

“Rather than spend time trying to add more years to our lives, what we should be doing is adding more life to our years…by doing that, I think it will have the surprising effect of helping us live longer.”

– Ellen Langer

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