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Thirty-five years of planning folk’s retirements has taught me the vast majority of people do their planning last minute solely to gauge the adequacy of long-term funding; rarely is due consideration given to the many strategic income options available, or the need for a tax smart income plan, one that doesn’t disrupt established investment or estate plans. This makes me think of the mountaineer who trains exclusively in the gym, who has the strength and endurance required for the climb but lacks the technical mountaineering experience to pull it off. It’s not ‘if’ something will go wrong in the mountains, it’s whether one will know what to do ‘when’ something goes wrong. In light of that commonality, let’s consider the guiding principles requisite to effectively mapping a retirement income:

• Maintain a comprehensive budget which differentiates fixed and voluntary expenses. Map both expense assumptions in your plan and observe the impact voluntary expenses will have on your retirement.

• Use fixed income sources, like Social Security, defined benefit pensions, and lifetime income annuities, to fund fixed expenses. Peace of mind may accompany the knowledge one will cover the other.

• Use fluctuating income sources to fight inflation with compounding dividends and growth, and to fund voluntary expenses. We reside in an inflationary culture; to avoid being eaten alive by inflation we must appropriate a portion of our capital to holdings that generally appreciate in an inflationary environment, like real estate, stocks, and other real assets. That said, it is essential to manage risk with these holdings.¹

• Diversify income sources based on need. Applying specific income sources to specific expense types has several benefits. Income which matches the nature, duration, and amount of certain expenses increases continuity in the overall plan. It also applies the financial principle of diversification to one’s retirement income sources, always a prudent maneuver. Finally, it helps avoid disrupting established investment and estate plans, since income streams are not few and inflexible. It takes many technical tools to safely ascend a glaciated mountain!

• Project growth rates on risk-holdings conservatively in your planning, and embrace the withdrawal strategy for those assets that is most complimentary to, and consistent with your customized retirement plan (see Guiding Withdrawal Strategies to Avoid Capital Depletion).  

• Map your retirement income from these various sources with a combination that will keep you in the lowest average tax bracket throughout the duration of your retirement. Understand this requires planning; the lowest bracket today might result in tax abuse later. 

The safest way to survive a big mountain expedition is to be on an accomplished team led by experienced guides. Ask your financial advisor to work with your CPA and Esquire to create a smart income plan, and then studiously apply it.      

Think about it, Shaun.

“In abundance of counselors there is victory” ~Proverbs 24:6

1 Smart Asset, “How to Create Your Own Retirement Income Plan”, Written by Eric Reed, December 3, 2023

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any opinions or forecasts contained herein reflect the subjective judgments and assumptions of the authors only and do not reflect the views of LPL Financial.

Dividend payments are not guaranteed and may be reduced or eliminated at any time by the company.

There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.

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Frequently and without warning mountain climbers venturing above treeline in winter are presented with the threatening combination of heavy snow and high winds, and the natural response is a panicked retreat. Panic while navigating such elements is dangerous, however, and sometimes safety resides above, not below. At the very moment clear thinking is required, terror can prevail, and when it does the result is often catastrophic. Yesterday the Fed’s favored inflation gauge (PCE) rose 3.7% in Q1, well above the expected 3.4%, even as Q1 economic growth slowed to 1.6%, well below the estimated 2.3%.¹  This was a double whammy of bad news for investors, or so it seemed, and the immediate response on Wall Street was panic selling. Let’s consider the potential implications of this unexpected development:

• Higher inflation may inspire the Fed to slow or even reverse planned interest rate cuts, a restrictive reaction that would threaten stock prices and further slow the economy.

• Slower economic growth may inspire the Fed to cut rates sooner than expected to ward off recession. This Fed reaction could cause inflation to re-surge in coming quarters, which would be a major threat to both stock prices and the economy in the years ahead.

• The combination of higher inflation and slower economic growth may cause the Fed to lengthen its interest rate pause and allow the markets to work this rare imbalance out itself.²

What is an investor to do amidst such a dichotomy of threats to precious capital? Let’s consider a few additional factors:

• The Fed is a politically motivated institution, and we are in a Presidential election year. It is highly likely the Fed will lean towards rate cuts, even at risk of higher inflation later. Also, keep in mind the economy disappointed more than inflation in yesterday’s report.

• Following a fearful crowd in a counterintuitive market is generally a costly mistake. I remember a friend describing a freak storm which hit the heavily populated summit of Mt. Washington one summer day years ago, and the chaos that ensued as dozens injured themselves rushing down the mountain in 90 mph winds, canines included! Pause was the prudent response as the wind, not temperatures, menaced hikers. 

• All three of the major indexes are in a bull market and solidly above their respective 200 Daily Moving Averages. Not a single bear market indicator has triggered, to my knowledge.

• We are amidst an earnings recovery, and the economy has in the past two years proven to be remarkably resilient while enduring serious threats.   

In conclusion, the recent sell-off seems more likely “a dip to buy” than “a forming bear market to sell”. Should the market surprise, remember stop-loss orders exist for an important reason; have them, follow them, and don’t interrupt the process.

Think about it, Shaun.

“I will both lie down in peace and sleep; for You alone, O LORD, make me dwell in safety” ~Psalm 4:8

1 Investor’s Business Daily, “The Fed’s Key Inflation Rate Sizzles As GDP Slows; S&P 500 Cuts Losses”, April 25, 2025 https://www.investors.com/news/economy/federal-reserve-inflation-rate-core-pce-gdp-q1-sp-500/

2 Stansberry Research, The Stansberry Digest, April 25, 2024

The opinions voiced in this material are general, are not intended to provide specific recommendations, and do not necessarily reflect the views of LPL Financial.

References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.

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Prior to the shot clock, basketball teams facing superior opponents would sometimes stall the game by maintaining possession and refusing to shoot. While these were incredibly boring games to watch, the strategy produced much closer contests by frustrating the superior team and reducing its time of possession and shot attempts. If the goal was to win, as opposed to entertain, this was a prudent strategy for outmatched basketball teams to utilize! It’s critical for modern American retirees to have a withdrawal strategy as thoughtful, for ‘the early retirement bear market’, inflation, and numerous other perils threaten widely dreaded capital depletion. Consider the following approaches as you design your own retirement income plan:

• The 4% Rule seeks to sustain capital for 30 years by withdrawing 4% in year one and adjusting for inflation each subsequent year. This system was built on assumed equity exposure of 50% and has proven less effective with less equity exposure. Other risks include the probability portfolio returns don’t measure up during periods of high inflation and non-allowance for the natural spending patterns of retirees.   

• The Guardrails Approach involves setting a withdrawal rate based on personal risk tolerance and then adjusting annually within set boundaries based on performance. While this is a more dynamic strategy than the 4% rule, the possibility remains that market returns fall below the low range set for withdrawals, resulting in capital depletion.

• The TIPS Ladder consists of a portfolio of Treasury Inflation-Protected Securities with varying maturities. This approach offers a steady flow of income, liquidity, and a level of capital protection during periods of high inflation. Drawbacks include less income than other types of bonds, interest rate risk, and little potential of stock-like returns.

• The ‘RMD-Only’ Approach is self-explanatory, but while this strategy provides the highest assurance early capital depletion will be avoided, a small percentage of retirees will receive sufficient income to meet retirement expenses from Required Minimum Distributions alone. This approach also doesn’t account for early retirement.

Other income strategies can also work well in specific situations, like The Safe Withdrawal Rate, which is a simple annual computation of withdrawals that will limit portfolio declines, and The Hurdle Rate, which pursues investment options most likely to match withdrawal amounts.¹ Think of all the lousy basketball teams that won games by hogging the ball and then hitting a big shot at the buzzer, and be creative when planning your retirement income strategy. Be sure your planning includes income duration, market risk, inflation, and projected rates of return. Remember the biggest aid to income and capital sustenance is fiscal discipline, and realize your plan needn’t be conventional, but effective.

May the Great Provider bless your income planning efforts!

Shaun.

“And my God will supply every need of yours according to his riches in glory in Christ Jesus” ~Philippians 4:19

1 Smart Asset, “What Are Safe Retirement Withdrawal Rates?”, March 14, 2024,

The opinions voiced in this material are general, are not intended to provide specific recommendations, and do not necessarily reflect the views of LPL Financial.

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‘Knowledge is power’ in at least one practical sense: it equips a person to make wiser decisions. Ed Viesturs, arguably the greatest mountaineer America ever produced, understood this principle when he read “Freedom of the Hills”, a 567page manual on mountaineering, twice cover to cover before putting a pair of crampons on. Warren Buffet consistently makes more profitable investment decisions than most investors because he knows more about the financial condition of the businesses he purchases. Consider the following ways you can increase your knowledge of the Social Security (SS) program to help maximize future benefits:

• Understand payments are based on earnings from your 35 highest income years, and that benefits are reduced for every year under 35 you didn’t work. Consider working until the 35-year mark is reached, even if it requires a part-time job in early retirement.

• Since benefits are also based on age, know your full retirement age (FRA), between age 65 and 67 for most, and the reduction of benefits for those receiving them before FRA by $1 for every $2 earned over $22,320 (2024).¹ Post full-time employment, working part-time and deferring benefits until FRA, especially if the 35-years aren’t yet attained, or if it is but the part-time earnings replace a lower earnings year, can be a highly beneficial strategy, especially for those who live a long life.

• Time your ‘start date’ (see Implications of the SS Start Date) for maximum benefits, and to complement other income sources. For those working full-time past FRA, future benefits continue to increase until age 70. For those who regret ‘triggering’ benefits too early, benefits can be suspended between FRA and age 70, and the claim itself can be withdrawn by repaying total benefits received.

• Have a spousal-benefit filing strategy. Lower-earning spouses can file earlier while the higher-earner’s benefits increase to age 70, at which time the couple can switch to filing on the higher-earner’s income history. Know which strategy best fits into your personal financial plan.

• Review your ‘Yearly Earnings Record’ reported on the annual SS statement and notify Social Security Administration of underreported income.

• Up to 85% of SS benefits are taxable.² Discover what portion of your SS benefit will be taxable and include it as you work out the logistical intricacies of your future retirement income. Have your investment advisor and tax planner work together to help achieve maximum tax efficiency over your lifetime.

Knowledge of mountain weather told Ed Viesturs to sit in his tent and drink hot tea during the 1996 storm that claimed the lives of a dozen climbers on Mt. Everest, including several of Ed’s dear friends, and then he summited in grief to honor their lives in the following weeks. The knowledge you gain of Social Security, in particular your earnings history, taxability of benefits, and claiming options, and the corresponding wise decisions you make on this issue, could be as financially beneficial to your family as Ed’s great decision was to his that fateful day.

Think about it and may your celebration of Easter be enlivened by an unshakeable hope in a resurrected Savior this week!

Your friend, Shaun.

“If you confess with your mouth that Jesus is Lord and believe in your heart that God raised him from the dead, you will be saved.” ~Romans 10:9

1 Social Security Administration, March 28, 2024 www.ssa.gov

2 Smart Asset, “10 Strategies to Maximize Social Security Benefits”, August 18, 2023, by Rebecca Lake

The opinions voiced in this material are general, are not intended to provide specific recommendations, and do not necessarily reflect the views of LPL Financial.

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

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The concept of investment diversification involves mitigating the risk of a catastrophic loss by owning numerous, low correlation assets. If capping exposure to a single security or asset class is wise because it effectively tempers investment risk, wouldn’t it also be wise to apply this principle to other hazards, like unknown future tax rates on income and gains? The first time I diversified my strategy to maintain core body temperature in the mountains by throwing a survival blanket in the backpack, it saved a dear friend’s life! Imagine a legislative scenario that exposes your lack of a tax strategy and begin diversifying exposure to one of ‘The Big Three’ risks against your retirement, your estate, and the future inheritance of your loved ones: the future tax hike.

I’d like to begin by identifying the potential pitfalls of the traditional retirement account because I believe most investors have allocated too high a percentage of their retirement savings to this “yet to be taxed” account type. Keep in mind this investment option also possesses significant advantages in many instances:

• Since none of your traditional retirement plan dollars have yet been taxed, the IRS co-owns the account with you and can increase their portion with the stroke of a Congressional pen. The probability of this occurring, given the U.S. government’s indebtedness and the unfunded status of Social Security and Medicare, is higher than most people understand, including CPA’s.

• All future withdrawals from traditional retirement accounts are taxed as income, in many cases resulting in a higher tax than the capital gains rate.

• Fully income taxable Required Minimum Distributions (RMD’s) must be taken annually beginning at age 73 whether the income is needed or not, which pushes many large account holders into a higher bracket.

• The Secure Act of 2020 imposed an account depletion requirement for non-spousal beneficiaries at 10 years from the original owner’s date of death; given the high probability your children will inherit your IRA during their peak earning years, this is a brilliant strategy by the IRS, your retirement account partner. You better have a strategy too!

Consider two attractive alternatives to the traditional retirement account, which are highly complementary when funded appropriately, given your individual tax situation:

• The Roth IRA and/or Roth 401(k) effectively release the IRS from the partnership by virtue of the tax deferred growth and tax-free withdrawal benefits. Advanced planning software can effectively compare the Roth and Traditional options within your personal financial plan. The younger you are, the more likely the Roth option will benefit you more than the traditional option.

• A non-retirement brokerage account differs from retirement accounts in that no legal contract is engaged with a fiscally reckless institution which can and has change(d) the rules in the middle of the game to its own advantage. Both gains and losses can be utilized annually to your tax advantage, even against assets not held in the brokerage account. There is no contribution limit, minimum withdrawal age, or mandatory distributions, and virtually any listed security is available. Penalty-free access to a potentially large amount of capital in a relatively tax-controlled distribution is a distinct benefit to investors.

Conrad Anker, perhaps the best technical climber in the world today, packed 200 pounds of exactly the right equipment to succeed in the First Ascent of Meru, formerly thought to be an unclimbable Himalayan peak. Effectively planning your retirement and ultimate estate distribution is equally complex, and the right mix of these three investment options can help you succeed. I strongly suggest that you introduce your fiduciary advisor, in an advisory relationship, to your CPA and have them work together for your tax benefit.

Think about it, Shaun.

“Give a portion to seven, or even to eight, for you know not what disaster may happen on earth.” ~Ecclesiastes 11:2

“The hardest thing in the world to understand is the income tax.” ~Albert Einstein

The opinions voiced in this material are general, are not intended to provide specific recommendations, and do not necessarily reflect the views of LPL Financial.

All investing involves risk including the possible loss of principle. No strategy ensures success or protects against loss. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

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The greatest danger I have faced in the mountains followed the willful disregard of a warning. Our Designer equipped us with a keen ability to perceive danger, most notably through fear, a healthy human attribute respect by the wise. The challenge with investing is fear instigates a herd mentality in a counterintuitive market, the most capital-destructive combination possible. Many notable investors, Warren Buffet included, profess the avoidance of catastrophic risk is the single most important aspect of successful investing. Let’s practice Mr. Buffet’s advice by recognizing and avoiding one of the biggest dangers in the market today.

In the 2010’s, following the Fed’s prolonged suppression of interest rates near zero percent, the risk/reward formation for Treasury Bonds was accurately described on Wall Street as “return-free risk”. A 10Year Treasury bond purchased at that time virtually guaranteed a loss of value against inflation for a decade, and was yet exposed to a large potential loss of principle should interest rates rise, which they did. The regional banks which failed in 2022 did so because they bought too many 10Year Treasury bonds. Consider the factors which might make today’s setup for High Yield corporate (‘Junk’) bonds even more dangerous:

• ‘Junk’ bonds are issued by companies with low credit ratings and the highest probability of debt default and are the riskiest bond type.

• The spread between the higher interest rate ‘Junk’ bonds must pay investors to compensate for default risk and the lower interest rate government bonds enjoy paying is just 3.26%, the lowest spread since Fed rate hikes began two years ago.¹

• An unprecedented wall of maturing corporate debt must be refinanced in the next three years at a far higher interest rate. Forensic accountant, Joel Litman, recently estimated 30% of these companies do not possess the earnings to support their debt at present rates.

• There’s a fair probability of recession in the next three years, which would cause the credit market to tighten, which would cause yields on ‘Junk’ bonds to rise, which would cause the value of existing ‘Junk’ bonds to fall, potentially a lot.²

The worst performing phase of the ‘Junk’ bond market cycle is the tight credit market recession, which might lie dead ahead. In spite of this risk, the yield on ‘Junk’ bonds, presently 5.78%,³ is insultingly low, which suggests that those who own them are misjudging risk. Why would an investor risk being stampeded in a mass exodus for less than 1% additional interest than a risk-free Treasury Bill? Let’s heed the warning ‘Junk’ bond owners are sending us, be happy with 5% risk-free interest, and reconsider an investment in ‘Junk’ bonds when they are on sale at a later date. Let’s also recognize a large discount may be forthcoming, and keep this asset class on our financial radar.

Think about it, Shaun.

“The prudent sees danger and hides himself, but the simple go on and suffer for it.” ~Proverbs 27:12

1 As measured by ICE Bank of America U.S. High Yield Index Option-Adjusted Spread 2 Daily Wealth, “The Worst Deal in All of Finance”, by Brett Eversole, February 29, 2024 3 Yahoo Finance, HYG Yield, March 8, 2024 https://finance.yahoo.com/quote/HYG

The opinions voiced in this article are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investments may be suitable for you, consult the appropriate qualified professional prior to making a decision.

The opinions expressed in this material do not necessarily reflect the views of LPL Financial.

High yield/junk bonds (grade BB or below) are not investment grade securities, and are subject to higher interest rate, credit, and liquidity risks than those graded BBB and above. They generally should be part of a diversified portfolio for sophisticated investors.

Bond yields are subject to change. Certain call or special redemption features may exist which could impact yield.

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I remember well a particular White Mountain storm my buddy and I survived ten or so years ago. On the descent from Mt. Adams to camp, 90 mph winds tossed us about like rag dolls, froze our goggles and then pelted our eyeballs with flying ice, buried every trail marker in 5-foot drifts, which buried us to the chest on every fall-through, and had us both convinced we’d be spending the night in a snow cave. Then my eagle-eye buddy spotted a cairn and got us out of there and to a hot cup of tea in a heated cabin in 30 minutes! This story has strong parallels to the Fed’s grand monetary experiment during, and following the Covid lockdown, the 40-year high inflation it created, along with a 2022 bear market in stocks and some of the worst 24-month performance for bonds on record, and now the soft economic landing the Fed seems to be miraculously engineering. Let’s consider the implications of this unique case study.

The Fed’s experiment in 2020 involved fabricating an unprecedented volume of new currency units with a keystroke, and then working with government agencies to deliver cash directly to individuals and institutions in need of a bailout due to the financially incapacitating lockdown. This process deviated from the normal distribution channel for newly printed dollars, which formerly kept those dollars in the possession of member banks, and rather placed them directly into the hands of spenders. The exercise taught regulators and Fed members that consumers more eagerly spend free money than earned money, and that when you force businesses to close their doors, they don’t just turn the lights off, they often shut the operation down.

While most of the resulting inflation from this experiment was associated with hyper-enabled consumer spending, now largely alleviated, some of it is entrenched in the resulting, yet unresolved, broken global supply chain. Investors are wise to recognize the danger of this entrenched inflation, just as we did those 5 foot deep, life-threatening snow drifts. Consider the probabilities:

• The Fed will likely leave interest rates higher for longer, and later reduce them less than the market believes.

• Homeowners with high mortgage rates will have less opportunity to refinance at lower rates in the near future than they realize.

• There is a massive wall of corporate debt which will mature in the next 30 months, and which must be refinanced at a far higher rate than the present interest rate. This will likely lead to a credit event and economic recession which will introduce market volatility. Big investment opportunities will accompany these events.

In summary, it is not time to dig a snow cave! Policy is generally favorable, a big plus for quality stocks. Bonds issued by companies with controlled debt and solid balance sheets look favorable. Maintain a strong cash position but be sure to receive the going interest rate. The Fed seems to be engineering a remarkable soft landing, but like our mountain ordeal, it is mostly attributable to God’s mercy, not the Fed’s intelligence. No one can defy principles indefinitely without due consequence, and honest Fed members admit the present path is unsustainable long-term, so remain vigilant.

Think about it, Shaun.

“My God shall supply all your need according to his riches in glory in Christ Jesus.”  ~Philippians 4:19

The opinions voiced in this article are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investments may be suitable for you, consult the appropriate qualified professional prior to making a decision.

The opinions expressed in this material do not necessarily reflect the views of LPL Financial.

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Award based on 10 objective criteria associated with providing quality services to clients such as credentials, experience, and assets under management among other factors. Wealth managers do not pay a fee to be considered or placed on the final list of 2012/2022 Five Star Wealth Managers.

A mountaineer’s decision of whether to trek in snowshoes or crampons involves numerous factors. How deep is the snow, and is the trail beneath it packed? Is the snow crusted on top, and if so, how much weight can it support? How hard is it snowing, and how fast is the fresh snow firming? Is the terrain too steep for snowshoes, and can you safely swap traction? At first glance, choosing between a Traditional and Roth Conversion IRA seems straight forward, but proper due diligence reveals that, like with the climber’s selection of traction, the implications are a bit more complex than they first appear.

The basics

Traditional IRA contributions are tax-deductible, earnings grow tax-deferred, and withdrawals are fully taxable as income. Withdrawals are penalized 10% if taken before age 59½, and required minimum distributions (RMD’s) begin at age 73 (increasing to age 75 in 2033).  

Funds converted from a Traditional IRA to a Roth IRA are taxed as income in the year of conversion, earnings grow tax-deferred, and withdrawals are tax free (when the rules are obeyed). Roth Conversions have no RMD’s, but earnings withdrawn prior to age 59½ are taxed and penalized, and each conversion requires a five-year holding period (to avoid a 10% penalty) and must be tracked.

The macro question is, will you benefit more by deducting contributions to retirement accounts (Traditional), or by avoiding taxes on retirement account earnings (Roth)? While advanced financial planning software can quickly find the apparent answer, even keeping ‘all other factors’ constant, there are additional factors.

The ‘not so’ basic

By reducing taxable IRA withdrawals, a Roth Conversion can keep you in a lower tax bracket in retirement and reduce the taxability of Social Security benefits. Additionally, beneficiaries will pay income taxes on Inherited Traditional IRA withdrawals, but not on Inherited Roth Conversion withdrawals (provided the five-year rule is met), enhancing the multi-generational aspect of your wealth-building.

Conversely, for those already receiving Social Security and Medicare benefits, a Roth Conversion will increase taxable income, which can raise both Social Security taxes and Medicare premiums. The Roth Conversion can also be problematic for those already receiving taxable distributions from Traditional IRA’s, and for those without sufficient non-retirement savings to pay the Roth Conversion tax due. It is inadvisable to have the Roth Conversion tax taken from the IRA itself, especially for those under age 59½, as the amount withheld will involve an early distribution 10% penalty. ¹

The strategic approach

Capitalize on strategic Roth Conversions and help minimize the taxation of your total retirement savings without increasing Social Security taxes or Medicare premiums by having your investment adviser work through the Roth Conversion option with your tax preparer annually. Never miss a highly beneficial Roth Conversion opportunity to neglect!

On two occasions, I have been endangered in the mountains by the wrong choice of traction. How you navigate the tax terrain with your retirement accounts is as financially consequential. God bless your planning efforts!

Shaun.

“Render to Caesar the things that are Caesar’s, and to God the things that are God’s.” ~Matthew 22:21

1 Smart Asset, “Ask an Advisor: Help Me Understand the ‘Best Way’ to Manage an IRA. Is It Better to Pay Taxes Now or in Retirement?”, by Michelle Cagan, CPA, February 2, 2024

The opinions voiced in this article are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investments may be suitable for you, consult the appropriate qualified professional prior to making a decision.

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History offers the investor reliable assistance to navigate the counterintuitive stock market, an enterprise adequately equipped to dispense the maximum amount of pain on the largest number of investors possible. Mark Twain observed that “History doesn’t repeat, but it often rhymes”, and from a world operating under the principle that “What has been is what will be, and there is nothing new under the sun” (Ecclesiastes 1:9). This principle was not lost on January, which has a history of accurately predicting the behavior of the stock market for the remainder of the year, but proceed with caution, for there is a greater principle at work which renders great suffering to non-observing investors. Let’s first consider January’s message:

• Over the past 74 years, stocks, as measured by the S&P500, have appreciated 11.4% over the remainder of the year following a positive January, while all 11-month periods averaged 6.9%. Stocks also rose 86% of the time following a positive January, and only 76% for all periods.

• Of the eleven times since 1950 a positive January followed a 20%+ return year (like 2023), the average remaining 11-month return was 14.8%, and stocks rose 100% of the time (vs. 6.9% and a 76% rise rate for all periods).

• Newton proved, “A body in motion tends to stay in motion”, and the stock market, in a new bull market following the bear market low in October, 2022, rose another 1.6% in January and set a new all-time high.¹

An investor can get excited adding to January’s impressive record the fact election years have enjoyed a very bullish history of their own, and the fact Fed policy (2024 rate cuts) is now favorable to the stock market, but remember Warren Buffet said, “an investor’s emotions are the primary enemy”! More importantly, observe an even greater principle: there are exceptions to principles. Exceptions do not invalidate principles, but they do radically alter the outcome in instances. King Solomon put it this way, “Give a portion to seven, or even to eight, for you know not what disaster may happen on earth” (Ecclesiastes 11:2).

The stock market is a brute that routinely destroys unwary investors. Be intimately familiar with your investment objective and risk tolerance level, and be sure your investments reflect both at all times. Stay diversified. Practice position sizing. Have an exit strategy and honor it. Be bullish, but remain vigilant.

Think about it, Shaun.

1 Stansberry Research, “Review of Market Extremes”, Brett Eversole, February 7, 2024

The opinions voiced in this material are general, are not intended to provide specific recommendations, and do not necessarily reflect the views of LPL Financial.

All investing involves risk including the possible loss of principle. No strategy ensures success or protects against loss. Dollar cost averaging involves continuous investment in securities regardless of fluctuation in price levels of such securities. Investors should consider their ability to continue purchasing through fluctuating price levels. Such a plan does not insure a profit and does not protect against loss in declining markets. 

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Award based on 10 objective criteria associated with providing quality services to clients such as credentials, experience, and assets under management among other factors. Wealth managers do not pay a fee to be considered or placed on the final list of 2012/2022 Five Star Wealth Managers.