Monthly Financial News – February 2024

Mar 7, 2024

I hope you had a great February.

I wanted to share a few interesting facts and articles I came across over the past month.

Financial News Roundup

  • I Bond Tax Forms: If you sold Inflation Bonds in 2023, make sure to source your 1099 for tax purposes. It is not mailed to you automatically. Here is how:
    • Log into your TreasuryDirect account. Click on “Manage Direct.” Under “Manage my taxes,” select “Year 2023.” Then click on “View your 1099 for tax year 2023.” Print directly from your browser save it as a PDF. If you have trouble, see this video.
  • AI + Real Estate: High mortgage rates are not slowing down the local real estate market. In fact, listings in San Jose area are selling at fastest pace in the US. Many locals feel wealthy, especially with the influx of investment into AI and the stock market at all-time highs. In addition, the majority of AI venture capital investment — about 50%  — occurs in San Francisco + San Jose. Certainly a benefit to the Bay Area.
  • Commercial Real Estate: In 2023 the value of office buildings fell 23%. Other commercial sectors did poorly too, but none quite as bad as offices.
  • Office Vacancy Rate: The root cause for the decline in the value of office buildings is obvious: Not as many people work in them. The office vacancy rate is 19.6%, higher than the previous peak from the late 1980s/early 1990s.
  • More on Offices: In certain cities, the value of office space has fallen a lot more. In San Francisco, office values are down nearly 60%. It’s hard to believe.
  • Best Stocks This Year: Many tech stocks, especially those in the semiconductor industry, are performing well so far this year (as of 3/1).
  • Tech Performance: Along the same lines, here’s a closer look at how eight of the largest and most popular tech/consumer companies have done this year (as of 3/7).
  • Increasing Wealth: As mentioned earlier, many people feel richer today than ever before. The wealth of Americans under 40 grew by 80% between 2019 and 2023. Americans between the ages of 40 and 54 saw their wealth increase just 10%, whereas those over 55 had wealth gains of 30%.
  • Diversification: I speak a lot about the benefit of diversifying. The chart below does a nice job summarizing some of the great brands and companies in Europe:
  • Fees at Private Funds: Thinking of investing in VC, a hedge fund, private equity, or other private investments? Make sure to know the fees. They can easily reach 5% or 6%, a tremendous hurdle.

    “Let’s say you expect the stock market to return an average of 6% annually over the next decade. If you’re considering a private-equity fund that effectively charges 6% in annual fees, do you think its managers can double the return of public markets? Can the managers of a venture-capital fund more than double the return of public markets?

    Maybe.

    But probably not.

    Remember: Future returns are uncertain, while fees are inevitable.”

    Jason Zweig

    The Wall Street Journal

    • Index Funds: S&P Global comes out with an annual report summarizing how active fund managers performed against their investment benchmark. For professionals trying to pick stocks, the results are consistently poor. Over a 10-year period, approximately 90% of funds fail to  beat their benchmark:
      As always, please reach out if you have any questions or would like to connect.

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      Past performance is no guarantee of future returns.

      The graphs and charts in this commentary are for illustrative purposes only and not indicative of any actual investment. Index returns do not reflect any fees, expenses, or sales charges. It is not possible to invest directly in an index. Stocks are not guaranteed and have been more volatile than other asset classes. Historical returns were the result of certain market factors and events which may not be repeated in the future. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgement in determining whether investments are appropriate for clients.

      This material is intended for information purposes only, and does not constitute investment advice, a recommendation or an offer or solicitation to purchase or sell any securities.

      1. Data from Morningstar. Returns over one year are annualized.

      Disclaimer: Investments are not guaranteed and are subject to investment risk, including possible loss of the principal amount invested. Past performance is no guarantee of future results. All allocations and opinions expressed are as of the date of this presentation and subject to change. The information contained herein does not constitute investment advice or a solicitation. Information obtained from 3rd parties is believed to be accurate, but has not been independently verified.

      The opinions expressed in this article are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security. The material is presented solely for information purposes and has been gathered from sources believed to be reliable, however Think Different Financial Planning cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source. Think Different Financial Planning does not provide tax or legal advice, and nothing contained in these materials should be taken as such. As always please remember investing involves risk and possible loss of principal capital. Advisory services are only offered to clients or prospective clients where Think Different Financial Planning and its representatives are properly licensed or exempt from licensure. No advice may be rendered by Think Different Financial Planning unless a client service agreement is in place.