2024 Q3 Client Investment Commentary

Key Points:

• Post-Election Insights on Market Reactions and Expectations
• Recent Fed Rate Cuts & the Impact on Interest Rates
• Future S&P Performance and Valuation Outlook
• Portfolio Segmentation Strategies to Navigate Potential Headwinds
• Recent Attractive Investment Options and Stock Exposure Adjustments
• Introduction to Buffer ETFs for Risk Management
• Current Opportunities for Incorporating Structured Notes into Your Portfolio

Q&A Highlights:

How do Structured Notes compare to Bonds in terms of Interest Rate Sensitivity?

Unlike bonds, structured notes are not directly affected by interest rate changes. Given current market conditions, they offer a fantastic opportunity to diversify and manage risk in your portfolio.

Do Structured Notes have a market value separate from their NAV?

Yes, structured notes appear similar to bonds on statements. You'll see both the purchase price and current market value.

What does 100.63% participation mean for Structured Notes relative to S&P Performance? 

In this scenario, your potential gains will slightly exceed the performance of the S&P. For example, if the S&P rises 100%, your return would be up 100.6%.

What can Structured Notes be tied to?

Almost anything. They can be tied to the Nasdaq or individual stocks, like NVIDIA or Amazon.

Can Structured Notes provide regular income?

While our current focus is on growth notes for capital gains, there are "income notes" available. These offer barrier protection and can be set up for monthly or quarterly income, subject to certain thresholds.

What about Bitcoin?

We're currently evaluating cryptocurrency integration for client portfolios. Given its high-risk nature, we're proceeding cautiously and will provide more information as we develop our strategy.

What's the outlook on future housing values?

The housing market remains a critical economic factor, driven by strong demand from millennials and new residents, coupled with rising interest rates. Significant changes in home values are unlikely. The rental market is presenting attractive opportunities for property investors, as more individuals are opting towards renting.

Summary: 

Mark Asaro emphasized the importance of integrating financial planning with portfolio management at Noble Wealth. He highlighted that a cohesive strategy is vital for achieving long-term financial goals. He compared the excitement around AI to the late 1990s tech boom, warning that despite current profitability, high growth expectations could be risky.

He noted that the recent market rally was largely influenced by reduced uncertainty following the election rather than the results themselves. He also expressed concerns about the economic implications of the new administration's policies, particularly regarding government spending.

Asaro provided a detailed analysis of inflation trends, revealing a significant rise since 2020. He indicated that reaching the Fed’s 2% inflation target might be challenging due to ongoing government spending and a tight labor market, increasing wages.

 He discussed investment strategies, particularly the acquisition of bonds, which had performed well amid fluctuating interest rates. He also noted the potential for increased market activity following the election, driven by substantial cash reserves seeking investment opportunities.

He highlighted Goldman Sachs' prediction of a 3% annual return for the S&P over the next decade, contrasting sharply with the historical average of 10%. He cautioned that the current stock market is overvalued, which could lead to lower future returns and increased volatility, emphasizing the importance of risk management, especially for clients nearing retirement.

Asaro discussed a significant shift of funds into money market accounts, now totaling around $6.5 trillion nationwide. He introduced structured notes as a strategic tool for risk management, allowing investors to participate in market gains while providing a buffer against losses. He stressed the importance of customizing portfolios to meet individual client needs, particularly for those aged 55 to 85, who are more sensitive to market fluctuations.