Financial Planning Fridays #81: Market Returns After a Strong February

Twenty-twenty-four is picking up right where 2023 left off. The S&P 500 was just up more than five percent for the first two months of this year. Let’s look together at what this has historically meant for market returns This table from Bespoke Research shows the returns from the end of February until the middle of the year, and then the end of the year, after four different ranges of returns through February since 1945. When the market is up more than five percent through February, that has historically been a fantastic sign for the market for the remainder of the year. In these instances, it has gone on to be positive the remainder of the year 91.3% of the time with an average return of 12.6%. And, although we are likely to see increased volatility and at least one temporary decline at some point this year, the historical data shows that the market’s strong start in 2024 is likely to continue and we should have another great overall year of returns. You can do three things to take advantage of this positive trend in 2024 First: Continue to save and invest as much as you can. Work on gradually increasing the amount you are investing each month and try to maximize your retirement account contributions. Second: Double check that your cash balances in your checking and savings accounts are not too high and, if you find that they are, consider implementing a Dollar Cost Averaging approach, as we discussed in FPF 80. Third: We are constantly looking for tax-loss harvesting opportunities. Even in excellent years, like last year, the market tends to have at least one decline during the year. These can be great opportunities to secure capital losses that can be used to offset future gains and carried forward indefinitely. Thank you and we look forward to talking with you again soon. Be on the lookout for our next Financial Planning Fridays episode. Subscribe to our Youtube Channel so you never miss an episode. Or contact us directly; schedule your 15-minute call with us today.