Skip to main content
All Posts By

Donna Cournoyer

Donna Cournoyer
In Market Updates

December 2024 Market Recap: It’s a Wrap: 2024 Review

In most instances, from Christmas through year end, investors are treated to a “Santa Claus rally”, where stock prices rise. But 2024 had an atypical end, with stocks falling flat.

The closing drop last year marks only the 12th time the benchmark S&P 500 index fell by more than 1% over that span since 1952.

So, does a “Santa Slump” mean poor returns going forward? Not quite, according to Bespoke Investment Group.

The research outfit found that, in the twelve months following a year-end decline of more than 1%, stocks tended to do better.

In fact, Bespoke found that large company stocks’ median performance after those eleven down years has seen a roughly 12% gain.

For 2024 as a whole, it was another banner performance for U.S. stocks.

In 2024, the S&P 500 index of large-company stocks rose nearly 25% and hit 57 new all-time highs along the way – the most since 1928. This stellar performance follows a 26% return for US stocks in 2023.

Once again, we have the technology sector, and the excitement around Artificial Intelligence (AI) to thank for these more-than-satisfactory gains. The seven largest tech companies, often referred to as the “Magnificent 7”, rallied 48% in 2024.

Stock gains were slightly less concentrated last year. The “Mag 7” contributed 55% of the return of large-company stocks, compared to 63% in 2023.

Outside of the US, stock returns were positive, but much less impressive. The MSCI EAFE (Europe, Australasia, and the Far East) index of foreign stocks rose by a pedestrian 3.5%.

One reason why foreign stock returns trailed far behind US stocks is that the US dollar strengthened by about 7% compared to other major foreign currencies.

Dollar strength acts as a drag on foreign stock returns, when those returns are measured in US dollars.

Another reason is that the Mag 7 is unique to the US.

While successful technology firms do exist outside US borders, no other country or region has an equivalent group of dominant, AI-focused companies like Amazon, Apple, Alphabet, Meta, Microsoft, Nvidia, and Tesla.

Bond returns also lagged far behind those of US stocks. Through September, intermediate bonds registered pretty good performance, returning about 5%.

But as the odds of a Republican victory at the polls went up in the fall, so too did interest rates (the concern being resurgent inflation), which had a negative effect on bond prices.

By the end of 2024, intermediate-term bonds, measured by the benchmark Bloomberg US Aggregate Bond index, returned 1.3%.

Short-term bond funds, where prices are much less influenced by changes in interest rates, did better, posting returns ranging from 4 – 5%.

Here’s a snapshot of quarterly US stock and bond performance in 2024:

Note: US Stocks = S&P 500 Index; US Bonds = Bloomberg US Aggregate Bond Index

-RK

Donna Cournoyer
In Reading Recommendations

Super Communicators

The journalist Charles Duhigg currently writes for the New Yorker Magazine; has written three books on habits and productivity; and was the recipient of the Pulitzer Prize for Explanatory Reporting for a series of articles on the business practices of technology companies.

Duhigg is probably best known for The Power of Habit, which posited that behavior, whether of individuals or groups, can be changed by disrupting the “habit loop” of trigger, routine, and reward.

His follow up Smarter, Faster, Better focused on productivity.

In Supercommunicators: How to Unlock the Secret Language of Connection, Duhigg explores the art and science of effective communication, offering insights into how individuals can foster deeper connections and navigate complex conversations.

Duhigg puts forth a framework for understanding the type of conversation an interlocutor is trying to have (Practical, Emotional, or Social), and then explains ways that individuals can align with the type of conversation at hand to promote meaningful engagement.

I found that a lot of the material in the book boils down to the application of common sense.

But I also find it helpful to have a new lens for looking at recurring situations, and practical tools for improving vital skillsets that foster productive communication.

The mid-20th century sociologist Willam H. Whyte said: “The greatest problem with communication is the illusion that it has been accomplished.”

Readers of Duhigg’s book may be better positioned to avoid this “greatest problem”, and instead benefit from clearer communication and, subsequently, deeper human connection.

-RK

Donna Cournoyer
In College Planning

College Applications Are In – What’s Next?

Your student has submitted the Common App. Congratulations – it’s a big step! So, what’s next?

While it may feel like you have crossed the finish line, college planning is not over yet. In fact, some of the most important steps begin now.

Some of the decisions you’ll make in the months ahead will have a great impact on not just the next four years, but for years after your college student receives that well-earned diploma.

Below are key areas of focus for staying on track financially.

If You Have Not Started a Plan to Pay, Begin Now

  • Make a list of your “likely schools” and their Cost of Attendance
  • Use college cost online calculators to give you an idea of how much each school will cost after financial aid and merit scholarships. Schools are required to have a Net Price Calculator on their website.
  • Use salary calculators to get an idea of what kind of salary you will make after graduation
  • If you are going to use loans for any part of payment, do your research now and definitely consider the Federal Student Loansthat each student is eligible for
  • Review parent college savings and assets intended to cover college costs and make a four-year cost estimate (remember costs increase an average of 5% per year)

Submit Your Financial Aid Forms

You likely have submitted the CSS Profile for your schools who require it by now (not all schools require this form).

Be sure to complete the FAFSA form (Free Application for Federal Student Aid) which is now open for the 2025-2026 academic year.

Plan Your Private Scholarship Search

There are many private scholarships available for students. A good place to begin this search is with your high school guidance office.

Search for local scholarships and use online tools. Be sure to never pay a fee, because legitimate scholarship websites do not charge a fee for application.

Here are a few websites to begin your private scholarship search:

Maintain Grades and Academic Focus

Colleges will be requesting final transcripts for review, so students should stay focused and keep grades up. Significant drops in grades could put college acceptance in jeopardy.

Consider Visiting or Revisiting Top Choice Schools

Since there are many factors that make a school the right fit (including if a student feels like they are at home on campus and with other students), make another visit, or be sure to visit if you haven’t already done so to decide if the college campus is right for your student.

Check out school resources, student activities, and even the geography and area of the school.

Take any opportunities to speak with students, faculty, advisors and department chairs.

Prepare for Acceptance Letters (and Possibly Rejection Letters)

In the coming weeks you will start to receive decision letters.

This is exciting! However, it can be stressful.

It is good to remember for your peace of mind that even if there are rejections, there is a school out there for your student where they will have a place to connect with peers and have the resources to succeed and enjoy the next four-year chapter of college life.

And Finally, Celebrate!

Over the coming weeks and months, especially during the holidays, you will likely have the opportunity to celebrate some acceptance decisions from your college list.

Be proud of this accomplishment and share with your family and friends. You (students and parents) have earned it!

-DC

Donna Cournoyer
In Economy

The Red Sweep and Taxes

The incoming Republican Administration has floated a range of ideas related to taxes – some are more likely to be implemented, others less so.

Changes to tax law must go through the legislative process, and since Republicans will control both houses in the 119th Congress, substantive change to tax law is likely in 2025.

Also, there are several adjustments to the tax law relating to retirement plans that will go into effect on January 1, 2025.

Possible changes to tax law, and upcoming tax-related changes for retirement plans are discussed below.

Tax Policy Under a New Administration

Many of the provisions from the 2017 Tax Cuts & Jobs Act which lowered taxes for individuals are set to expire at the end of 2025, including: lower individual income tax rates, a larger child credit, higher standard deductions, and the bigger lifetime estate and gift tax exemption.

Tax policy ideas floated by Republicans during the presidential campaign include:

  • Make the 2017 tax cuts permanent
  • Raise the child tax credit
  • Drop the corporate tax rate
  • Impose across-the-board tariffs
  • End green energy breaks
  • Tax-free overtime pay
  • Exempt Social Security from taxes

The tax experts at The Kiplinger Tax Letter believe that the last two bullet points (tax free overtime pay and exempting Social Security from taxes) are unlikely to gain enough support to pass Congress.

Current expectations are that Congress will pass a big tax bill in the fall or winter of 2025, with most tax changes starting in 2026.

One potential hurdle to enacting all the proposed tax breaks is cost: if all the changes are implemented, the revenue loss for the federal government is estimated to be about $9 trillion, according to financial magazine Barron’s.

We expect to be sifting through a lot of new information in the months ahead and reporting back to you as we get clarity on changes to the tax situation – especially changes related to individual income taxes and exemptions.

Retirement Plans: Upcoming Changes for 2025

The following key dollar limits on retirement plans are set to increase in 2025.

401(k) Plans

  • Contribution limit rises to $23,500
  • People aged 50 and older can contribute an extra $7,500
  • People aged 60 – 63 can contribute a larger “catch up” of $11,250

SIMPLE IRAs

  • Contribution cap rises to $16,500
  • People aged 50 and older can contribute an extra $3,500
  • People aged 60 – 63 can contribute a larger “catch up” of $5,250

Traditional IRAs

  • Contribution cap remains $7,000
  • Catch-up for people aged 50 and older is an additional $1,000
  • Couples deduction phaseout: Adjusted Gross Income (AGI) of $126-000 – $146,000
  • Singles deduction phaseout: AGI of $79,000 – $89,000
  • Note that phaseouts apply to people covered by a workplace retirement plan
  • If only one spouse is covered by a plan, phaseout for the uncovered spouse is: AGI of $236,000 – $246,000

Roth IRAs

  • Contribution cap remains $7,000
  • Catch-up for people aged 50 and older is an additional $1,000
  • Couples contributions phase out at AGI of $236,000 – $246,000
  • Singles contributions phase out at AGI of $150,000 – $165,000

Qualified Charitable Distributions (QCDs)

  • People aged 70.5 and older can transfer up to $108,000 from an IRA directly to charity
  • QCDs can count as Required Minimum Distributions (RMDs), but they are not taxable and are not added to AGI

-RK

Donna Cournoyer
In Economy

Reflection on the US Election

The conclusion of the 2024 election cycle delivered a red sweep, with Republicans set to take control of the White House and the Senate in 2025, while maintaining control of the House of Representatives.

For slightly more than half of American voters, this was the desired outcome.

For many other Americans, though, the election result was unwelcome.

And for those who are philosophically at odds with the people soon to be in power and the policies they promote, it may be deeply troubling.

Susan, Donna, and I understand the anxieties that can come with change, and we share many of the concerns that have been vocalized since the election.

We recognize that there will be periods of time where staying invested in the financial markets might be psychologically challenging.

Also, there likely will be stretches in the months and years ahead where asset prices decline, and portfolio values drop.

These events – policy enactment and market direction – may be causal, or they may be coincidental, and I suspect at times it will be hard for investors to keep clear heads as the situation unfolds.

Remaining unemotional when it comes to your money is always a challenge.

It might help to remember that nearly all individuals are prone to confirmation bias, which is the tendency to interpret new information as confirming one’s existing beliefs.

As investors, we must be extra vigilant to avoid the confirmation bias trap. Taking action in your portfolio that might hurt the probability of your financial plan succeeding over the long term isn’t a recipe worth cooking.

It can be uncomfortable to climb a wall of worry holding a portfolio that contains risky assets, even when we know this is a sound long-term financial decision for most people, under most circumstances.

As fiduciaries, Susan, Donna and I are legally bound to put the best interests of our clients first.

As advisors who care deeply about our clients, we are professionally oriented to work in a collaborative and compassionate manner.

We pledge to continue to approach the financial environment with objectivity, to deliver personalized and accurate financial advice to our clients, and to promote your financial well-being at all times, whatever circumstances may arise.

As we move toward 2025, we hope that the current state of the nation doesn’t weigh too heavily on your overall well-being.

It has been helpful for me personally to remember that there have been times in the past when our country has been starkly divided, and to an even greater degree than it is today.

I have found some comfort in reading Abraham Lincoln’s first Inaugural Address, and especially the following passage, taken from the last few lines:

 “Though passion may have strained it must not break our bonds of affection. The mystic chords of memory… will yet swell the chorus of the Union, when again touched, as surely they will be, by the better angels of our nature.”

Donna Cournoyer
In Market Updates

November 2024 Market Recap: November Surprises

Few were nonplussed by the outcome of the Federal Reserve’s meeting on November 7: a 0.25% cut in short-term interest rates.

The Fed has been consistently telegraphing a message that it believes there is room for further interest rate reductions.

The top of the target range for the Federal Funds rate, which influences how other short-term interest rates are set, is now 4.75%, down from a recent peak of 5.5%.

Somewhat surprising was how Americans voted in the November 5 presidential election.

Opinion polls had been forecasting a statistical dead heat, but the margin of victory in the popular vote was wider than expected: 1.6 percentage points, or about 2.5 million votes, in favor of Donald Trump.

More surprising was the gap in electoral votes (312 to 226), and that both houses of Congress will be under Republican control in January.

The biggest surprise for investors in November, though, was the extent to which the US stock market rallied.

The S&P 500 and the Dow Jones Industrial Average indices delivered their biggest monthly percentage gains of 2024 in November.

Stocks have pushed higher on expectations that proposed tax cuts and deregulation will further boost corporate profits.

And stocks have largely ignored the potential risks, such as higher inflation, that may weigh on the financial markets if pledges to impose tariffs on US trading partners come to pass.

For the month of November, US large company stocks gained 6% and US small company stocks did better still, registering an increase of 10.5%.

US investment-grade bonds returned 1.1%. Foreign stocks, where returns are measured in US dollars for US investors, struggled as the US dollar moved higher, and declined by 0.3%.

Year-to-date, US large company stocks have gained nearly 28%. US small company stocks are up by 23%. Foreign stocks have risen by about 6.5%, and US investment-grade bonds have returned 3%.

Here’s a snapshot of stock and bond performance for November:

US Small Co Stocks: CRSP US Small Cap Index; US Large Co Stocks = S&P 500 Index; US Bonds = Bloomberg US Aggregate Bond Index; Foreign Stocks = MSCI EAFE Index

-RK

Donna Cournoyer
In Reading Recommendations

Intelligent Investing

The Intelligent Investor, by Benjamin Graham, has been called “by far the best book about investing ever written” by investment superstar Warren Buffett.

Even so, you will be excused if you log onto Amazon, or visit your local bookstore, and choose to make another reading selection.

Graham’s book was first published in 1949 and contains references to companies and situations that may be unfamiliar to the 21st century reader.

But the third addition of the text, released last week, on its 75th anniversary, might be attractive to financially adventurous readers, in part as an interesting artifact, but also for contemporary commentary provided by the Wall Street Journal columnist Jason Zweig.

Graham was born in London in 1894 and entered Columbia University at age 16. Before the end of his senior year, Graham was offered faculty positions at Columbia in three different departments: English, Philosophy, and Mathematics.

Graham went on to start a successful investment company, in addition to holding university faculty positions.

His most famous student, while teaching at Columbia Business School, was none other than Warren Buffett. In addition, Graham was one of the original supporters of an investment certification program that eventually became the Chartered Financial Analyst (CFA) designation – of which I am a proud holder.

HarperCollins Publishers turned to Jason Zweig in June 2003 to revise Graham’s initial text. The second edition was published in 2005, and Zweig took on the new assignment of writing annotations for each chapter in the 3rd edition.

Among many important concepts, Graham introduced the idea of margin of safety: the belief that an investor should not focus exclusively on how much money can be made but on how much money can be lost, because even the best investors are likely to be wrong roughly 45 percent of the time.

For individual investors, the value in Graham’s “definitive book on value investing” may be more about what not to do, than what to do, with your money.

-RK

Donna Cournoyer
In Financial Planning

CTA Deadline Reminder

Given the importance of the new federal law to business owners, we’re re-publishing this article, which appeared in the October newsletter.

The Corporate Transparency Act (CTA) is a new federal law that aims to curtail money laundering and other illegal activities by making it clear who the individuals behind a particular business entity are.

The CTA was enacted in early 2021 and requires “reporting companies” to file information by January 1, 2025.

If you are a small business owner or own a corporate entity, such as an LLC, you likely will be required to report your company’s beneficial ownership information (BOI) to the Financial Crimes Enforcement Network (FinCEN) bureau, which is a division of the US Department of the Treasury.

We encourage all our clients who think that they might be subject to the CTA to contact their CPA or attorney to determine if they are subject to CTA reporting and to assist in handling the filing.

Below are links to resources so that you can learn more about the CTA if you think you might be required to file.

Key CTA Resources:

Moore Financial Advisors cannot give specific CTA advice or assist with actual filing.

-RK

Donna Cournoyer
In College Planning

How Financial Aid Applications for College Consider Parent Assets

Our colleague and college specialist Donna Cournoyer contributed the following update for college planning

The topic of the FAFSA (Free Application for Federal Student Aid) has made frequent appearances in our client letters, especially since the major changes from the FAFSA Simplification Act were rolled out last year in the 2024-2025 application.

Many would say the FAFSA rollout could not have gone worse.

Late opening, lack of accessibility, and late communication of data to schools made for a very unpleasant year for financial aid applicants, as well as financial aid administrators.

There is hope for some improvement this year, although the opening is again delayed with the Department of Education aiming for a December 1 launch for the 2025-2026 form, instead of the usual October 1.

For first-time applicants, this can add additional stress to the already onerous process of preparing and applying to college and applying for financial aid.

Below is a breakdown of the information needed on the financial aid forms, with a focus on asset reporting requirements.

The Application Forms

FAFSA: The Federal application used to determine eligibility for any Federal funds, including Pell Grants, Federal Work Study and Federal Student Loans.

  • Required by every school for financial aid applicants
  • More limited questions on assets for parents

CSS Profile: The application provided by the College Scholarship Service, which schools can require for their applicants with additional questions for eligibility review.

  • Required for approximately 250 schools, mostly private, as a secondary form in addition to the FAFSA for determining eligibility for school grants and funds
  • More questions on parent assets which can lower a student’s eligibility for college specific need-based funds

Positive changes to the simplified FAFSA include fewer questions and some changes for 529 college savings account reporting.

  • Applicants’ sibling 529 accountslonger need to be reported
  • Distributions from any 529 accountfor educational expenses no longer need to be reported as untaxed income

Parents often have a lot of uncertainty about how assets are reported and weighed on the FAFSA and CSS Profile applications. And rightly so, as there are significant inconsistencies on how the Federal government looks at parental assets compared with how colleges view those assets.

Colleges have their own funds and awarding policies and can award their funds as they wish to their applicants.

Asset Comparison and Requirements for the FAFSA and CSS Profile

Parent Assets are counted at 5.64%, and Student Assets are counted at 20% (and in some cases up to 25%) on the CSS Profile.

Home Equity

  • FAFSA – Not required
  • CSS Profile – Required and considered in eligibility calculation

Equity in Other Investment Real Estate

  • Required on both FAFSA and CSS Profile and considered in eligibility calculation

Family Businesses

  • Required for both FAFSA and CSS Profile and considered in eligibility calculation

Cash Values of Life Insurance Policies and Qualified Annuities

  • Not required on FAFSA
  • CSS Profile – Non-Qualified Annuities are countedas assets

529 College Savings Accounts

  • Parent or Student Accounts required for both FAFSA and CSS Profile
  • Accounts in other names, such as grandparents or relatives are NOT required on the FAFSA, the CSS Profile may ask for this information
  • Withdrawals used to pay for college are not included on the forms

Parent Retirement Accounts

  • Parents’ personal retirement accounts, such as 401(k), IRA, Roth IRA, pensions, Keough Plans, are NOT required on the FAFSA, but the CSS Profile will ask for these, and could consider them

Other Parent Investments

  • Other investments which are non-retirement accounts, such as mutual funds, brokerage accounts and any other non-retirement accounts are required and considered on the FAFSA and CSS Profile

UGMA/UTMA Account

  • Required on the FAFSA and CSS Profile, and are in the Student’s Asset section, if the student is the custodian

Interest and Capital Gains

  • Will be considered, as they will show in income on your Federal Tax Return

Planning Ahead

If you are a few years or more away from your student applying to college, work with your accountant and financial advisor if you have expected one-time fluctuations in your income, such as the sale of a business.

Your financial advisor and accountant may also have suggestions on how to lower your adjusted gross income (within adherence to any tax laws) in the years leading up to the financial aid applications, which may help increase your eligibility for financial aid.

Final Thoughts

My general advice for completing these forms, especially the CSS Profile:

  • Report Accurately
  • Don’t Overestimate
  • Don’t Overshare

Parents may have conflicted feelings and concerns on sharing their personal information.

Getting qualified guidance for planning for any upcoming income changes in the years prior to college applications, along with guidance on how to answer FAFSA and CSS questions, will go a long way in contributing to your confidence in receiving accurate awards and talking to school counselors about your personal financial situation.

Donna Cournoyer
In Economy

One Helluva Horse Race

Horse racing by actual horses in America may be on its last legs. Aside from big events like the Kentucky Derby, attendance at racetracks is abysmal.

Crowds at Belmont in New York, for example, are down by nearly 90% from four decades ago, according to the End Horse Racing Coalition; tracks are closing; and races are in fewer and farther in between.

However, the horse race for US president is in full stride with record participation likely at the polls.

Terms like neck and neck and down to the wire (relating to equine contests) come to mind when considering the election on November 5th.

Below are three different methods for forecasting the outcome of the 2024 Presidential campaign: traditional polling; the betting markets; and campaign fundraising.

The Economist forecast, constructed from traditional polling data, which had been giving the leg up to Harris after she entered the race in July, reset to even on October 30, and as of November 3 had moved slightly in favor of Trump (51% to 49%), but essentially shows a statistical dead heat.

Source: The Economist

The Economist forecast lines up with the last New York Times / Sienna College poll conducted from October 20 – 23, which asked the question: If the 2024 presidential election were held today, who would you vote for? The results were: 48% for Trump, 48% for Harris.

However, alternative indicators point strongly in different directions.

The betting markets have been consistently forecasting a Trump win. The website RealClear Polling (RCP) aggregates odds data from betting sites like BetOnline, Betfair, and Bwin, and the November 3 “average” from RCP put the odds of Trump winning at 53.9% versus 44.9% for Harris.

Betting sites are an interesting way to measure sentiment, because their signals are derived from people willing to put their money where their mouths are. Polymarket claims a total of $1.8 billion has been wagered on the 2024 US Presidential election on its platform.

But it is also possible that some big fish are skewing outcomes. In a recent MarketWatch article by Brett Arends (who has covered sports and political betting for decades) the columnist warns: “the betting markets have their own flaws as a forecasting tool and need to be taken with a grain of salt.”

The betting markets also have been quite volatile. As recently as mid last week, Polymarket gave Trump a 67% chance of winning. That’s now down to 52%.

Another money-where-your-mouth-is measure is fundraising, and Harris leads by a sizable margin in campaign fundraising.

The Harris campaign fundraising efforts have outpaced Trump’s efforts by 3:1, according to Federal Election Commission Filings, as reported by Forbes on Oct 25.

And Harris’s campaign set a political fundraising record in the third quarter, bringing in $1 billion in the three-month period that ended September 30.

The majority of both campaign committees’ spending has been on advertising.

Given her cash advantage, Harris has been able to spend more of her time campaigning during the weeks prior to the election in swing states, while Trump has had to allocate time raising money in places where his popularity is high.

We will need to wait until election day (or, if not, hopefully sometime soon thereafter) to see how the money advantage plays out in the polls.

I’ll share a closing thought on the elections related to investing from the folks at independent research firm DataTrek:

“We see the US presidential election as a toss-up and we’re entirely OK with remaining long (owners of) US large company stocks regardless of the outcome. Our mental model is that America is a business as much as it is a country…

No matter which party occupies the White House or controls the chambers of Congress, companies always adapt and continue to innovate and grow.”

In my view, the DataTrek opinion (above) is sound long-term financial thinking and is strong “case for” sticking to a portfolio that supports your long-term financial goals.

-RK

Close Menu