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Market News and Insights

"Stagflation and Tariffs and Bears! Oh, My!"

By Christopher Liong • March 10, 2025
“Stagflation and Tariffs and Bears! Oh, My!” In the Wizard of Oz, when Dorothy, the Scarecrow and the Tin Man are venturing into the dark forest, they discuss what types of animals they might encounter. In fearing this unknown danger, they start singing “Lions and Tigers and Bears! Oh My!” This fear of the unknown has investors and markets a bit on edge as of late, given the aggressive and unorthodox approach the new administration has been utilizing to carry out promises made during the campaign. We will try to address some of these concerns and, as always, emphasize the long-term view and more of a focus on growth fundamentals, as the market ultimately returns to that. Concerns. #1 Stagflation. The Wikipedia definition of Stagflation is the combination of high inflation, stagnant economic growth and elevated unemployment. While in the very near term, the concerns about tariffs driving prices higher may be valid and the headlines around egg prices due to bird flu are pushing prices higher, there are more prices actually on the decline which we expect to continue, such as gasoline prices, consumer technology, used cars, eating away from home (fast casual and restaurants), clothing, toys and many other food items.

January 2025 Insights

By Christopher Liong • January 13, 2025
“Winners never quit and quitters never win.” – Vince Lombardi Happy New Year to all! We wish everyone a safe, healthy and prosperous year and hope that 2025 has gotten off to a good start as we look forward to what the year has to bring. In honor of Quitter’s Day (the second Friday of January when many people abandon their resolutions for the New Year) and the start of NFL Playoffs, we start with this quote. After a nice bounce post-election in the S&P 500, the market has since settled and is roughly flat since November 5, 2024. This newsletter will have a slightly different format to start the year, as we review the year that was and discuss some things to look out for in 2025. 2024 Year in Review Below are the full year returns of various indices (including dividends) through 12/31/24.
2024 Election

We the People of the United States…

By Christopher Liong • November 6, 2024
“We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution of the United States of America.” - Preamble to the United States Constitution After months of political rhetoric, back and forth accusations and approximately $16b spent on advertising, the results are finally in, and investors can now refocus on policies and the direction of growth for our country. These words should remind us what OUR great country was built on and that we will always find a way to not only succeed, but thrive. Elections.  With the potential for a Republican sweep, the US Dollar has jumped to a new three-month high, interest rates are up, the price of oil is down and bitcoin surged to a new all-time high of over $75k. Historically, the market has rallied between Election Day and year-end on average...

“So it begins.” - King Theoden, The Lord of the Rings: The Two Towers

By Christopher Liong • September 25, 2024
As we enter the first days of fall and finally have that first interest rate cut behind us, we always ask ourselves, “What next?” This past week, saw a plethora of analysts provide historical performance post rate cuts, so instead of trying to reinvent the wheel, we will share with you a summary of “The Week In Charts.” We are always reminded of that favorite caveat “past performance is not indicative of future performance,” so we will try our best to provide some perspective to these charts and tables. Interest Rates. So how does the market perform after the first interest rate cuts and what sectors perform best? These charts and tables were published by Canaccord Genuity Capital Markets. This first chart shows that when the initial rate cut occurs, when the S&P 500 Index is near a high, the market tends to do well over the next 12 months, with the exception being the financial crisis in 2007/2008… 
A man is standing on top of a calculator next to a house.

Potential Changes to Estate & Gift Taxes in 2026

By Vijay Aluwalia • August 14, 2024
As part of the Tax Cuts and Jobs Act of 2017, the federal estate, gift and generation-skipping transfer (GST) lifetime tax exemption doubled from $5.49MM in 2017 to $11.18MM in 2018, which has since increased to $13.6MM in 2024 as it is indexed for inflation. For married couples, each spouse has the $13.6MM exemption, which means you and your spouse may give away a total of $27.2MM before paying the federal gift tax. However, unless Congress acts before January 1, 2026, the exemption will automatically reset to approximately $7MM, significantly reducing tax-free gifts. This reversion could lead to significant tax liabilities for those whose estates surpass the reduced exemption limit. If your assets exceed this threshold, your heirs could find themselves with a hefty tax burden. Below are a few ways to take proactive measures now: 1. Lifetime giving: A direct gift of cash, securities, investments, businesses, real-estate or any other assets with value up to the lifetime exemption is the simplest strategy. 2. Establishing trusts: The immediate act of giving $13MM to your heirs may have unintended negative implications, which can be mitigated with creation of irrevocable trusts, which can permit withdrawals based on pre-specified schedules and conditions. If you need further advice or have specific questions, please contact your financial advisor and/or a tax professional to navigate these changes effectively.
A woman is sitting in a yoga pose on top of a hill overlooking the ocean at sunset.

Finding Calmness Amidst the Chaos…The Recent Selloff.

By Christopher Liong • August 6, 2024
As I sat down on Sunday evening to begin writing the newsletter for August, markets in Asia were indicated down sharply. This morning, we woke up to the Nikkei doing this: 
A fence surrounds a grassy field on a foggy day.

“Summertime and the livin’ is easy…” – Porgy & Bess

By Christopher Liong • July 11, 2024
We hope everyone had a safe and relaxing July 4th weekend. With the summer now in full swing, heat and humidity included, we have half the year under our belt. While the situation seemed like we were going to cruise into the elections in November, the recent debate has created a little bit of uncertainty. As the saying goes, “Grab your popcorn…!” Interesting construction fact for the summer:
A lighthouse is sitting on top of a grassy hill.

Spring into Summer

By Christopher Liong • June 3, 2024
With Memorial Day weekend having just passed, we kick off the unofficial start to summer. While there was a slight scare in April that inflation was returning, that concern has passed and investors have refocused on the economy and fundamentals. Here is a recap of what has happened over the past several months and what we continue to think about regarding the market and potential opportunities. Inflation and Interest Rates We cannot seem to get past this topic. There has been a little back and forth over the past several months as to whether inflation is coming back or is slowly subsiding. Our position is that it is gradually coming down, though nowhere near as fast as investors originally hoped for earlier in the year. Looking at the table below from March, most of the categories above where inflation is currently at have seen weakening data points since. Rent and housing increases are slowing if not outright declining now in some regions, and personal care companies and restaurants are reporting weaker profits due to weakening demand, especially from low to middle-income customers. 
A close up of a pink flower on a tree branch.

Mother Nature, Easter and Stock Pickers vs. Groundhogs

By Christopher Liong • April 8, 2024
Happy belated Easter to all and we hope everyone is okay from the surprise earthquake that only Californians have really come to expect last Friday. With spring technically here and Easter just behind us, it brings to question one of the most famous prognosticators of the last century. No, not Warren Buffet, but Punxsutawney Phil. Unfortunately, his track record is not quite as strong with only a 39% accuracy rate over the past 140 years. With that level of “success” it gives us stock pickers hope just yet! The Market The broader market as defined by the S&P500 was up 10.2% in the 1Q of 2024, while the Dow was up 5.6%. This strength was mostly a continuation of what we saw in the 4Q of 2023 and was once again driven by the larger technology stocks that are associated with Artificial Intelligence (AI). While the Magnificent 7 continues to attract attention, this performance was more focused than previously and was primarily driven by Nvidia (NVDA) +88%, Meta Platforms (META) +42%, Microsoft (MSFT) +14% (Note: Tesla (TSLA) was -30%, and Apple (AAPL) -8%). 
A football player wearing a helmet with the letter a on it

Compound Interest

By Christopher Liong • March 22, 2024
Small changes now can lead to large impacts in the future. Compound interest is the interest you earn on interest. Small differences in the present rate can lead to big differences in the multiplier effect down the line.
A close up of an american flag waving in the wind

Happy Presidents Day!

By Christopher Liong • February 19, 2024
First, a very belated Happy New Year to all. With the recovery of the S&P 500 in 2023, despite the narrowness of it led by the Magnificent 7, 2024 promises to be an interesting year with interest rate increases and inflation likely behind us, the Chinese economy continuing to struggle, recession concerns waning and an election in November.
A doctor is holding a piggy bank with a dollar coin in it.

The Health Savings Account (HSA)

By Vijay Aluwalia • December 12, 2023
A health savings account (HSA) is a tax-advantaged medical savings account available to individuals who are enrolled in a high-deductible health plan (HDHP). HSAs can be invested in a manner similar to that of IRAs and have three distinct tax benefits: 1) contributions reduce taxable income, 2) earnings from interest and investment income are tax-deferred and 3) withdrawals to pay for qualified medical expenses are tax-free.
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