Cutting through the noise...so you don't have to.
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December 2024
The Slice
A Monthly Market Update & Investment News Roundup
Cutting through the noise...so you don't have to.
Good morning,
Markets rallied in November following Trump's victory. Here's a recap:
The S&P 500 hit 6000 for the first time and recorded a 5.5% gain for the month.
The average financial stock was up 10% on the prospect of less regulation, a steeper yield curve, and more dealmaking.
And then there's Bitcoin: It moved up nearly 40% in November as investors bet the new administration will take a more favorable stance on crypto.
Chinese markets weren't so fortunate. Large cap Chinese stocks lost nearly 5% as investors there brace for the impact of potential tariffs.
Putting November's Trump Bump aside (or Slump, as the case may be), what will the election's impact be on 2025 and beyond? As it relates to inflation - a key issue for voters in last month's election - it's going to be a "horserace" according to J.P. Morgan's Michael Cembalest. On one side, "it's the tariffs and deregulation inflationary pressures." On the other, it's the "deflationary pressures of the deregulatory agenda and a pro-business agenda."
Yes, I had to read that several times too, but it checks out.
Here's what you need to know.
Markets
News & Notes
2025 Outlook: Bank of America Head of U.S. Equity Strategy Savita Subramanian says "the average retiree is looking for yield...and they're currently in money market funds where the Fed is cutting and their yield goes down." She expects them to trade up to dividend stocks that can beat declining yields on cash. (FBN)
Trump Tax Cuts 2.0: What Trump's win means for state and local tax deductions, expiring estate tax exemptions, tariffs, and the extension of the Tax Cuts & Jobs Act. (Barron's)
Mr. Secretary: Trump's pick for Treasury, Scott Bessent, will be tasked with leading an economic agenda that includes cutting taxes and raising tariffs. He also inherits $36 trillion in debt. (NYT)
Housing Market Demographics: The average age of a seller in today's housing market just hit 63 - an all time high. First time home buyers are now in their 30's. (WSJ)
Christmas Trees: The median price of a real Christmas tree last year was $75, but that may be different this holiday season. The effects of Hurricane Helene felt in western North Carolina, labor shortages and inflation have left farmers, well, up a tree. (WSJ)
Estate Planning Advice from a Billionaire: Warren Buffett thinks you should talk to your family about your will before you sign it, even if you aren't a billionaire. Only 1 in 4 families have had such a discussion according to a recent survey. (WSJ)
Just Put it Under Your Mattress: Banks are getting out of the safe deposit box business. (WSJ)
(Pie)Chart of the Month
The Case for Private Equity in your Portfolio:
Private Equity vs. MSCI World, 2007-2023
Source: Pantheon. See full chart disclosure here.
Private equity has consistently outperformed publicly traded global stocks. On average, private equity outperforms global stocks by about 3.5% per year in both bull and bear markets according to Pantheon going back to 2002. For accredited investors with sufficient liquidity, PieCapital views private equity as an essential part of a client's allocation.
Firm News
Goldman Sachs recently made headlines when the bank predicted that the S&P 500 would only return 3% over the next decade, less than a third of its historical return. David Kostin, the U.S. Equity Strategist cited concerns over valuation and concentration risk (top 10 stocks > 35% index). And with the 10 year treasury trading near 4% and inflation near 2.5%, bonds don’t look all that compelling either. So, what is an investor to do? At PieCapital, we are leaning in to private capital for clients with sufficient liquidity.
But what is Private Capital? Private Capital is simply an investment in non-publicly traded companies, meaning they don't trade on an exchange, like Apple. What makes Private Capital an attractive asset class for investors? One reason is that the opportunity set is much bigger than in public markets: In the U.S., there are 385x more privately held companies with 50 or more employees than publicly traded ones. This means less efficient markets for active investors to uncover opportunities. And for clients who can tolerate the illiquidity of these investments (which we try and ascertain through financial planning), investors can pursue higher returns over more liquid, public markets.
This month, I re-underwrote three strategies in use for clients in the following categories: private equity, private credit, and infrastructure. Due diligence reports are available on request by emailing will@piecapital.com.
Past performance is no guarantee of future results. See full disclosure here.
Employee #1
Welcome Molly Robertson!
Before joining PieCapital, Molly spent a decade working at BB&T & Truist in both the community banking and wealth divisions. A native of Lexington, NC, Molly graduated from Appalachian State University with a major in interior design and a minor in art history. She lives with her husband and two daughters in Holly Springs, North Carolina. When she’s not spending time with family, you can usually find her working on a new crochet project, crafting or reading.
I got to know Molly during our time at BB&T and can attest to her high follow thru and attention to detail. Molly will serve as an executive assistant helping me onboard new clients, conduct cashiering for existing ones, and perform general administrative tasks that are needed to make us go. With five new clients this quarter, there's plenty of work to do and I am grateful that she's here. Welcome aboard, Molly!
Party Like It's 1997
Christy took Ben to Nashville to see a Creed concert. They also went to the science museum and the Goo Goo Chocolate Company!
Happy Thanksgiving / Happy Birthday Cate!
The Revels spent Thanksgiving in the Outer Banks with extended family. While there, Cate celebrated her 10th birthday. Happy Birthday, Cate!
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Your Retirement Copilot
Hi, I'm Will Revels, a West Point graduate turned wealth advisor. For over a decade I have helped transitioning business owners and retiring executives develop clear strategies to achieve their financial goals.
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