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Stock Market Recap: June 2024


  • Mega-cap growth companies rallied sharply higher in June, pushing the S&P 500 higher during the month (+3.59, S&P 500 TR Index). 
  • The rally in mega-cap growth companies opened a wide gap between growth and value in June: large cap growth rose +6.74% (Russell 1000 Growth TR Index), while large cap value fell -0.94% (Russell 1000 Value TR Index).
  • Interest rates fell as data showed a drop in the rate of inflation, which pushed bond markets higher during the month (+0.95%, Barclays US Aggregate Bond TR Index)

The outlook for corporate earnings has shifted higher- analysts now expect S&P 500 earnings to have grown +9% year-over-year the previous quarter. The increased growth expectations are driven in large part by a belief in the continued growth of investment in technology and alternative intelligence.

This reacceleration of growth expectations has resulted in the mega-cap companies representing a large portion of the S&P 500’s value: the top 10 companies in the S&P 500 make-up 37% of the index’s value, the largest weight since the index was created. The impact of the increased concentration in the top 10 companies can be seen in the difference between the index (+15.3% YTD, S&P 500 TR Index) and the average stock (+5.1% YTD, S&P 500 Equal Weighted TR Index).

There are high expectations for future growth in the top 10 companies of the S&P 500: their contribution to earnings over the last 12 months stands at roughly 27%, compared to a weight of 37%. This is a reminder for investors to maintain a diversified approach; markets such as US small cap stocks and international stocks offer lower valuations with an improving fundamental outlook.

Source: FactSet, Standard & Poor’s, J.P. Morgan Asset Management. The top 10 S&P 500 companies are based on the 10 largest index constituents at the beginning of each month. As of 5/31/2024, the top 10 companies in the index were MSFT (7.0%), AAPL (6.3%), NVDA (6.1%), AMZN (3.6%), META (2.3%), GOOGL (2.3%), GOOG (1.9%), BRK.B (1.7%), LLY (1.5%), JPM (1.3%), and AVGO (1.3%). The remaining stocks represent the rest of the 492 companies in the S&P 500.

  • Earnings season starts on July 12th; investors expect second quarter earnings to have grown +9% year/year. If earnings growth finishes that high, it would be the strongest quarterly growth rate since 2021.
William Winkeler
About the Author

Bill has more than 12 years of experience in the investment industry, most recently as Managing Director of Investments at a private wealth management firm. In his role at Confluence, Bill chairs the…

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Are you Creating Space? Establishing New Habits


Although many of us have good intentions when it comes to prioritizing physical, mental and emotional health, the necessary action of consistency with establishing new habits to support these categories doesn’t just happen overnight.

Most of us can identify areas in our daily routines that need improvement. However, factors such as energy levels, time and effort required, childcare availability, and finances can present significant obstacles to making beneficial changes. As a result, most of us continue on the path that works “well enough” for the short term, even if it’s not ideal. The issue typically isn’t a lack of desire or knowledge to make changes, but rather the absence of a conducive environment for these changes to take root and flourish. In other words, a space needs to be created for change to happen.

Take healthy eating for example. It’s something you know you want to do more consistently, it’s something you know would be beneficial to your short and long term health, but you can’t seem to bring yourself to take inventory of your fridge and pantry to begin to stock quality items in your home, to set yourself up for success. Or maybe preparing food is a barrier. You have access to cooking and food prep videos and articles at your fingertips, but where in your schedule have you created time to prepare then execute actually trying it yourself?

Peeling back the layers on why good intentions don’t necessarily translate to actions can be painful and humbling. It’s caused many of us to stay stuck in the same place, in different areas of our lives, for a long time. So, what’s the solution?

It’s time to stop fooling ourselves that changes just happen without our concentrated effort. If we fail to plan, we plan to fail. Once evaluated that a certain tweak/change would be advantageous, it’s time to take the step to create the structured space in the schedule where a new habit can take root. Keep it simple. Narrow the focus. Most of us are juggling many “glass balls” that we cannot afford to drop and have shattered. An example of this would be personal health, which too often can be put on the backburner for a time period out of practical necessity, but where does this lead to in the long run? Consider this encouragement to start where you are.

Here are some tips for getting started:

1. Identify. What is really frustrating you about your daily or weekly routine? Frustration is a driver to change. Be specific here. If you just focused on what was frustrating and what would make it less frustrating/better, what would it be?

2. Reserve. Pick a time in your schedule and dedicate yourself to education (self-education through reading, watching how-to videos, podcasts, in person professional help), as you prepare to make a change.

3. Clarify. Write down a clear goal and put it somewhere you can see it daily, as a reminder to yourself.

4. Take Action. Go and do it! It’s time to execute rather than thinking about it anymore!

5. Practice this for small habit changes or big habit changes. Enlist accountability people as desired. Pat yourself on the back for taking a step of action.

My goals may differ from yours, and in fact, they likely do, spanning personal to professional aspirations. However, the implementation of self-discipline to commit to change and adapt to new ways of living will likely positively impact all areas of your life.

“If you talk about it, it’s a dream, if you envision it, it’s possible, but if you schedule it, it’s real”. Let’s have less talk, more scheduled action and a space created for ourselves to actually adopt behavior change. Cheering you on today!

Disclaimer: This article offers educational insights from a registered dietitian on establishing healthy principles. It is a supplementary resource and not a substitute for personalized advice from a medical professional familiar with an individual’s health history.

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Stock Market Recap: July 2024


  • Major reversals across the equity market, with small cap stocks and value stocks outpacing the large-cap and growth peers sharply in July.
  • Catalyzed by decelerating inflation data, small cap stocks (Russell 2000 TR Index, +10.16%) finished significantly ahead of large cap stocks (S&P 500 TR Index, +1.22% and large cap growth stocks (Russell 1000 Growth TR Index, -1.70%).
  • Additionally, the S&P 500 had its first daily drop greater than 2% in July, the first time in over 350 trading days. This was the longest such streak of low daily volatility in over 15 years.

Last month’s monthly update discussed the record levels of concentration in the S&P 500 – a factor that likely played a role in the significant shift equity markets saw in July.

After the June inflation (CPI) report was released, investors shifted expectations to a much higher likelihood of a rate cut in September. Generally, small cap stocks have a greater sensitivity to interest rates, given the use of more floating rate debt compared to large cap stocks. This factor, combined with improving earnings fundamentals, resulted in the Russell 2000 outperforming the NASDAQ by over 5% the day of the inflation report. This represents the largest single day outperformance of small cap stocks versus technology stocks in over 40-years (chart below)

Source: JPMorgan Asset Management, Bloomberg, as of July 21, 2024

Small caps kept up the momentum of July, along with large cap value stocks (Russell 1000 Value TR Index, +5.11%).

July represented an important reminder to long-term investors about the benefits of maintaining a diversified approach

  • Earnings season wraps up in August: as of 7/29/2024, 40% of S&P 500 companies have reported earnings, and 76% are beating expectations for the second quarter.
  • The Federal Reserve is expected to use August to signal its intentions around cutting interest rates during its September meeting. The Federal Reserve last hiked in July 2023 and has held rates constant since.
William Winkeler
About the Author

Bill has more than 12 years of experience in the investment industry, most recently as Managing Director of Investments at a private wealth management firm. In his role at Confluence, Bill chairs the…

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Disability Insurance Planning for Physicians: Key Facts & Considerations


Nearly 1 in 5 people living in the United States will suffer a disability lasting more than one year before the age of 65.1


Imagine not being able to practice your specialized medical skills due to illness or injury. The financial impact could be devastating for you and your family. As a physician, your income hinges on your ability to work. That’s why individual disability insurance as part of your financial plan is crucial for safeguarding your earning potential.

Choosing disability insurance involves understanding the different types and the benefits each brings. For example, there are two categories of disability policies, short-term disability and long-term disability. Short-term disability policies are typically obtained as a group policy benefit from one’s employer while long-term disability policies are also offered as a benefit through an employer BUT are more commonly purchased as an individual policy through a broker or financial advisor.

Additionally, you can purchase own-occupation coverage or any-occupation coverage. The difference between the two is meaningful. Under an own-occupation policy, a person is typically considered disabled if they are unable to perform the material and substantial duties of the job they were working at the time they became disabled. Under an any-occupation policy, a person is considered disabled if they are not able to perform substantial duties of any job for which the person may earn a certain percentage of their pre-disability earnings.  

For physicians, it is essential to work with an advisor who understands your needs and unique situation to recommend the right disability insurance strategy.

Beyond basic understanding of disability insurance, it’s important to understand key factors like the carrier, benefit amount, elimination period, and renewal options.

  • Insurance Carrier – know who you are working with. Currently, only 5 carriers offer “true” own-occupation coverage.
  • Benefit Amount – the IRS publishesd “Issue & Participation” amounts based on your income and existing disability coverage.
  • Waiting Period – the amount of time one must wait to collect benefits when disabled – typically 90, 180, 365, or 730 days.
  • Benefit Period – how long one will be eligible to receive their tax-free benefit. This is typically to age 65, 67, 70, or lifetime.

The above list is not all encompassing but should be considered as you construct your insurance package.

At Confluence Financial Partners, we work with physicians to secure and protect their income in the event an unexpected illness or injury becomes reality. Please reach out if you would like to start the conversation today.

Life and disability insurance and life insurance with long-term care benefits are not issued through Confluence Insurance Services. Products and services referenced are offered and sold only by appropriately appointed and licensed entities and financial advisors and professionals. Not all products and services are available in all states. 

  1. Centers for Disease Control and Prevention. Disability and Health Data System (DHDS) [Internet]. [updated 2023 May; cited 2023 May 15]. Available from: http://dhds.cdc.gov
      ↩︎
Rob Linkowski
About the Author

Rob Linkowski brings more than 30 years of experience in designing and providing quality life and disability insurance programs to his clientele of medical professionals, business owners, family and friends. Rob is passionate…

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Stock Market Recap: September 2024


  • Stock and bond markets continued to rally in September, following the Federal Reserve’s first interest rate cut.
  • Gains expanded beyond market leaders, such as large cap growth and technology stocks, with broader participation within the S&P 500, large cap value, small cap stocks, and international stocks.
  • The S&P 500 Index total return of +22.08% year-to-date as of September 30th represents its best start to a year since 1997, and the best start to a Presidential election year in its history.

The Federal Reserve reduced the Federal Funds Rate by 0.50% as expected in September, ending the rate hiking cycle that began in March 2022 and featured over 5% worth of interest rate increases. 

The market’s outlook largely shifted in early July, when the June inflation report affirmed the outlook for declining inflation, clearing the way for the September rate cut. Since that period, stock and bond market leadership has shifted as the economic and fundamental outlook has changed.

Since June 30th (after the inflation report and rate cut), market leadership has broadened beyond the Magnificent 7 stocks. The Equal-Weighted S&P 500 Index rose +9.60%, ahead of the market-cap weighted S&P 500 TR Index (+5.89%). Within large cap stocks, large cap value gained +9.43%, ahead of large cap growth’s +3.19% gain. Small cap stocks also participated in broadening, with the Russell 2000 TR Index rising +9.27% during the third quarter. Lastly, core bonds (Barclays US Agg Bond TR Index) rose +5.20%, pulling ahead of money market funds in 2024 as short-term rates begin to decline. The changing environment highlights how dynamic financial markets can be and serves as a reminder of the importance of maintaining a diversified approach to investing.

Sources: Morningstar, June 30th to September 30th . Average S&P 500 Stock = S&P 500 Equal Weighted TR Index, Large Cap Value = Russell 1000 Value TR Index, Small Cap = Russell 2000 TR Index, Developed International = MSCI EAFE NR Index, S&P 500 = S&P 500 TR Index, Core Bonds = Bloomberg US Agg Bond TR Index, Large Cap Growth = Russell 1000 Growth TR Index.

  • Labor market data will be watched closely as investors look for information ahead of the Federal Reserve’s meetings in November and December.  
William Winkeler
About the Author

Bill has more than 12 years of experience in the investment industry, most recently as Managing Director of Investments at a private wealth management firm. In his role at Confluence, Bill chairs the…

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Your Financial Guide for a Career Transition


Navigating a job change is a significant undertaking, especially for those with considerable assets and financial interests. This guide is designed for professionals, including executives, physicians, and business owners as they work through the intricacies of transitioning to new opportunities.

Here are some important things to consider:

  • Review your compensation plan.

Understanding your compensation package is important, because compensation is usually a huge part of transition decision. Beyond salary, bonuses, and deferred compensation, it’s essential to assess the long-term value of your total package. For example, if you are re-locating, consider the impact of cost-of-living adjustments.

Don’t forget to evaluate non-monetary benefits such as professional development opportunities, wellness opportunities, and overall company culture. All of these can have a significant impact on your job satisfaction and overall well-being.

  • Evaluate your retirement plan.

What do I do with my old retirement plan(s)?

Roll into an IRA: Working with a financial advisor can help you determine if rolling into an Individual Retirement Account makes sense. The benefits of this option include having more investment flexibility and control. Typically, you will have a broader range of investment options compared to an employer sponsored 401(k) plan. This allows you to diversify your portfolio while also consolidating accounts if you have multiple 401(k)s with previous employers. If you work with an advisor, you will have professional investment management as well as financial planning available. A good financial advisor will also be able to help with tax and estate planning matters, though he/she cannot replace your CPA or attorney.

or

Move your old retirement plan to your new employer: Most employer sponsored retirement plans allow for assets from previous retirement plans to flow into the new plan. This is certainly better than leaving the assets with your old employer’s plan, but this option likely does not include the investment options and flexibility as well as professional management and planning found if you roll assets into a managed IRA. That said, it may be your lowest cost option.

  • Understand changes to your health insurance.

Be aware if there is a waiting period for health insurance with your new employer. If that is the case, look into extending your previous employer’s coverage through COBRA if there is a gap.

Have a solid understanding of the different health insurance plans offered by your employer and consider factors such as the network of providers, deductibles, co-pays, coverage for prescription drugs and preventative care to name a few.

Take advantage of  tax-advantaged accounts like Flexible Spending Accounts (FSA)s and Health Savings Accounts (HSA)s if your employer offers them.  These accounts can help you save money on qualified medical expenses. Additionally, HSAs can serve as an additional retirement savings vehicle.

  • Review Stock Options and Equity Compensation Programs.

If your previous employer offered stock options or equity, be sure to understand the vesting schedules and the implications of leaving.

Equity compensation can significantly increase your wealth, but also add complexity to your financial and tax planning picture. For example, the decision to exercise stock options should be timed to optimize tax implications and align with your broader financial goals, risk tolerance, and time horizon. Working with a financial advisor can help you make an informed financial decision.

Melissa Pirosko
About the Author

Melissa’s love of investing combined with her desire to help and serve others led her to a career in wealth management. Melissa enjoys working with clients to help them reach their financial goals…

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Organic or Conventional? Equip Yourself to Make the Best Choice for Your Health


Label reading, ingredient decoding, deciphering marketing terminology – all of these aspects individually or combined can create an environment of confusion for shoppers at the grocery store. Amongst product labels, “USDA Organic” is found on many foods and beverages, but what does it really mean? Let’s focus in and unpack this particular label.

What is meant by the label “USDA Organic”?

The United States Department of Agriculture (USDA), is a division within the US government that focuses largely on the country’s safety and efficiency of farming, food and sustainability practices. The USDA Organic label is federally regulated, meaning the product its placed upon has met the standard requirements to earn the status of this particular label (more on this, below). Because this is a regulated label with strict criteria, the consumer can have confidence when they see this symbol on a product that the process in which the ingredients have gone from farm to table has been verified through a system of checks and balances.

  • The standards the USDA has set for being labeled organic are the following¹:
    • No synthetic chemicals used on the product (such as pesticides and fertilizers otherwise used in conventional foods to keep bugs and termites away)
    • No genetically modified organisms (GMO’s)
    • No antibiotics or growth hormones given to animals (when the product itself comes from an animal) but rather a focus on their welfare, such as raising animals in natural conditions
    • Sustainable farming practices used to protect the environment currently and long term

These standards are in place to ensure both the consumers and environment are set up for better health outcomes, given how products are grown and processed. More information surrounding these categories can be found on the USDA website.

If a food product does not have this label, the default is known as a conventional food.  A conventionally grown product such as a head of broccoli, for example, could miss the mark for organic in a minimum of one category or at most, all categories. Conventional foods are found in most products in store and have their own system of checks and balances for consumer health, as well.

Whereas conventional foods are still federally monitored for safe limits of pesticides using scientific data and risk assessment on a regular basis, these types of products do not have to meet as rigorous requirements surrounding chemical usage on crops and soil health, for example. Additionally, they may utilize GMO’s, and/or differ in the treatment of animals and farming practices.

In summary, organic verified products have tighter regulations when it comes to how a food is grown and processed, and also how animals are fed and raised. Common concerns from consumers regarding conventional foods vs. organic surround long term pesticide intake risk on human health, animal welfare, and the question of varying levels of nutrient composition. Given the increased cost of production to farm organically, organic products most often have a higher price tag than their conventional counterparts. Many believe there are benefits to choosing organic, but it may not be necessary or realistic to consume all or even most food intake organic, depending on food budget and/or availability of items where someone lives and shops on a regular basis.

When it comes to a measurable benefit to human health, choosing organic foods vs. conventional, the scientific evidence is not definitive, although observational studies point to better health outcomes over time for organic consumption vs. conventional². Like any decision in the adult world, the type of food you purchase requires taking inventory of what you value, prefer, and can afford.

If at this point you’ve identified you’d find it worth the money and efforts to choose organic, in some capacity, for yourself and family, it can be helpful to have a simple starting point.

Each year, the Environmental Working Group (EWG), a non-profit organization whose focus is public health and the environment, releases two lists – the dirty dozen and clean fifteen. These lists are considered “shopper’s guides” for the consumer who wants to better understand which foods have been tested and shown to have a greater amount of pesticide residue (dirty dozen) compared to produce with less or no traces of pesticides (clean fifteen). This is a great place to begin for a consumer who desires to limit pesticide residue on food they’re consuming, due to potential health risks associated with chemical exposure for adults and children, alike.

2024 Dirty Dozen³ – EWG recommends to buy these organic, when possible, to avoid concentration of pesticides:

  • Strawberry
  • Spinach
  • Kale, collard & mustard greens
  • Grapes
  • Peaches
  • Pears
  • Nectarines
  • Apples
  • Bell and hot peppers
  • Cherries
  • Blueberries
  • Green beans  

2024 Clean Fifteen⁴ – EWG reports least contaminated with pesticides, among produce tested. OK to buy conventional:

  • Carrots
  • Sweet potatoes
  • Mangoes
  • Mushrooms
  • Watermelon
  • Cabbage
  • Kiwi
  • Honeydew melon
  • Asparagus
  • Sweet peas
  • Papaya
  • Onions
  • Pineapple
  • Sweet corn
  • Avocadoes

You can request a copy of these lists from the EWG website, print them out for your fridge or screenshot them for your next trip to the grocery store. You can also take a deeper dive to learn more about the EWG’s process for food testing on their website.

When it comes to eating nutritiously by principle, it’s best to consume whole foods, as close to natural form as possible, and a variety of types within each food group (fruits, vegetables, fats, proteins, whole grains, dairy). If a fixation on choosing organic vs. conventional is presenting as a hindrance from eating animal products or produce, that may be missing the point for what healthy eating actually looks like. The term organic isn’t necessarily synonymous for better health, so it’s important to view the whole picture.

As a consumer, it’s important to be aware of common food labels such as “USDA Organic” on products like meat, dairy, fruits, vegetables, eggs and other processed foods. Understanding what the term implies can assist in avoiding conflicting information and confusion, in this area. The choice of conventional vs. organic is yours, and it’s a personal one. My hope is that you feel better acquainted with the facts and are empowered to make your choices with confidence!

Sarah Rupp
About the Author

Sarah’s lifelong passion for health and wellness began in her early years, learning about nutrition and meal planning alongside her mother. As an athlete, she experienced the direct influence of nutrition on physical…

McMurray

Sources:

  1. McEvoy, Miles. 2012, March 22. Organic 101: What the USDA Organic Label Means. USDA. https://www.usda.gov/media/blog/2012/03/22/organic-101-what-usda-organic-label-means
  2. Vigar, V., Myers, S., Oliver, C., Arellano, J., Robinson, S., & Leifert, C. (2019). A Systematic Review of Organic Versus Conventional Food Consumption: Is There a Measurable Benefit on Human Health?. Nutrients12(1), 7. https://doi.org/10.3390/nu12010007
  3. EWG’s Shoppers Guide to Pesticides in Produce: The Dirty Dozen. Environmental Working Group. https://www.ewg.org/foodnews/dirty-dozen.php
  4. EWG’s Shoppers Guide to Pesticides in Produce: The Clean Fifteen. Environmental Working Group. https://www.ewg.org/foodnews/clean-fifteen.php

Disclaimer: This article offers educational insights from a registered dietitian on establishing healthy principles. It is a supplementary resource and not a substitute for personalized advice from a medical professional familiar with an individual’s health history.

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Maximize Your Year End Giving: Charitable Planning Strategies for Individuals


As the end of the year approaches, it’s an opportune time for clients to utilize strategies that align charitable goals with their financial objectives. In this article, we will explore various charitable planning opportunities and strategies to leverage to help our clients optimize their giving while improving their overall financial situation.

One of the primary incentives for charitable giving is the potential to reduce taxable income. However, timing and method play a crucial role in maximizing these benefits. Below are several techniques to consider as part of year-end planning:

  • Avoiding Capital Gains Tax: Donors avoid paying capital gains tax on the appreciation of the asset.
  • Maximized Tax Deduction: They receive a charitable deduction for the fair market value of the donated securities, provided they’ve held the asset for more than one year.
  • Watch Your Limits: The IRS places limits on the amount clients can deduct for charitable contributions. For cash donations, the limit is typically 60% of AGI, while donations of appreciated assets are limited to 30% of AGI. If the total contributions exceed these limits, the excess can be carried forward for up to five years.
  • Helps Portfolios: This strategy is particularly useful in bull markets, where many clients may have appreciated assets they would otherwise sell to rebalance their portfolios.
  • Satisfies Required Minimum Distributions (RMDs): For clients who have reached their required beginning date, QCDs can reduce taxable income by offsetting RMDs.  However you need to be careful to make QCDs first, before taking any other income yourself.  The first dollars out of a qualified account are the RMD dollars; if you take your RMD first and then try to make a QCD later, it won’t count.
  • Tax-Free Distribution: Unlike regular withdrawals, the QCD is excluded from the client’s taxable income, offering a substantial benefit for those who don’t itemize deductions, which can help clients stay within lower tax brackets or avoid Medicare premium increases.
  • This strategy is particularly advantageous for clients who may no longer need the full amount of their RMD for living expenses but are still required to take it.

One way to implement this is through a Donor-Advised Fund (DAF):

  • Clients can make a lump-sum contribution to a DAF and receive an immediate tax deduction.
  • In subsequent years, the client can take the standard deduction and not make additional charitable contributions until the next “bunching” year.
  • The funds can be distributed to charities over several years allowing donors to maintain their philanthropic commitments.
  • It’s ideal for clients facing a windfall year or who have highly appreciated assets they wish to donate.
  • For clients seeking to create a structured giving plan, or for those who may not have specific charities in mind yet, a DAF can serve as a helpful intermediary.
  • Generate Income Streams: Charitable trusts allow donors to convert highly appreciated assets into a steady income. For example, with a Charitable Remainder Trust (CRT), donors or their beneficiaries receive a fixed or variable income for life or a specified period. This can be an attractive option for retirees or clients seeking supplemental income while also supporting charities in the future.
  • Grow the Legacy: One of the most significant benefits of charitable trusts is the potential to transfer appreciated assets, such as real estate or stocks, without triggering capital gains taxes.  When assets are placed into a Charitable Remainder Trust (CRT) and sold, the proceeds are untaxed to the trust, allowing more principal to be retained for both income generation and charitable legacies.
  • Immediate Tax Deduction: Contributions to a charitable trust are eligible for an immediate charitable deduction, based on the present value of the future charitable donation. This deduction can help offset taxable income in the year of the contribution, providing immediate tax relief.

Your wealth manager can help you formulate a personalized year-end charitable giving plan. Here’s a checklist approach to developing it:

  1. Identify Charitable Goals: What causes are important to you?
  2. Review Taxable Income: Determine whether itemizing or taking the standard deduction makes sense.
  3. Evaluate Assets: Identify appreciated securities or other assets that could be donated.
  4. Consider Timing: Ensure donations are made before December 31 to qualify for the current tax year.
  5. Explore Donor-Advised Funds: If clients plan to give over multiple years, DAFs may be an optimal solution.
  6. Engage Family: Involve family members in the charitable conversation.
  7. Check Matching Programs: Encourage clients to explore employer matching gift
Chuck Zuzak
About the Author

Chuck joins Confluence Financial Partners with 13 years of experience in the financial services industry, most recently as Director of Financial Planning at JFS Wealth Advisors. At a fundamental level, Chuck’s passion for…

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Monthly Market Recap: September 2023


Month in Review

  • Stocks had their worst month since December 2022 and bonds fell for the fourth straight month. 
  • Rising Treasury yields were the primary catalyst – the 10-year Treasury yield hit a 16-year high during September.
  • Restrengthening inflation data and the prospect of additional interest rate hikes by the Federal Reserve are the main catalysts for the pressures.

Bond Yields Return to Average

Despite nearly a decade of low interest rates, the 10-year Treasury yield typically averages 3% to 5% yield, going back to the late 1800’s. For the first time since 2007, the 10-year Treasury rose to 4.5%, comfortably returning to long-term averages. Recent inflation data was stronger than expected, contributing to the increase in yield, along with the prospect of additional rate hikes from the Federal Reserve. The increase in yields reduces the value of bond investments in the short-term, and higher yields present a more attractive alternative to stocks – two reasons stocks and bonds struggled in August and September.

What’s on Deck for October?

  • Outside of fundamentals, there are headwinds from the on-going autoworkers’ strike, and a potential shutdown of the US government. Both events historically have not had lasting impacts on the economy and markets.
  • The surprisingly strong labor market was the primary reason the predicted 2023 recession did not happen – investors will be watching job creation and unemployment claims data closely for any softening.
  • An additional interest rate hike in November or December is very much up in the air. Inflation data had strengthened somewhat, along with energy prices increasing sharply since June. It is unclear if this is enough for the Federal Reserve to hike one more time.

Download the September 2023 Market Recap below:

William Winkeler
About the Author

Bill has more than 12 years of experience in the investment industry, most recently as Managing Director of Investments at a private wealth management firm. In his role at Confluence, Bill chairs the…

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Stock Market Recap: August 2024


  • Broad-based gains during the month of August, with US large cap stocks finishing the month up +2.43% (S&P 500 TR Index). In the US, large cap value (+2.68%, Russell 1000 Value TR Index) finished ahead of large cap growth (2.08%, Russell 1000 Growth TR Index) for the second consecutive month.
  • US small cap stocks took a breather after a strong July, finishing August down -1.49% (Russell 2000 TR Index). Outside the US, developed international equities benefitted from a weakening US dollar, rising +3.25% in August (MSCI EAFE NR USD).
  • Bond markets rose for the fourth straight month in August, with the Barclays US Agg Bond TR Index finishing the month +1.44%.

The Federal Reserve is poised to cut interest rates in September, the first interest rate cut since they began increasing interest rates in March 2022. Investors are now pondering, “what happens next?”: a “soft” or “hard” landing for the economy.

While not officially defined, a soft landing would be a continued decline in inflation and interest rates, without growth slowing down enough to enter a recession. Hard landing would be the opposite – a continued increase in unemployment and a slowdown in economic growth, resulting in a recession. Soft landings are historically less common, with the most recent (and classic case) being the 1994-1995 period.

Inflation has fallen closer to the Federal Reserve’s target rate, while unemployment has also begun to increase, prompting the likely rate cut in September. However, other signs indicate continued strength in the economy: for example, estimates for GDP growth this quarter stand at +1.5%. With no clear forecasts for a soft or hard landing, investors have priced in three to four rate cuts by the end of 2024, indicating expectations that the Federal Reserve will start and continue rate cuts in September.

Sources: Capital Group, Bureau of Economic Analysis, FactSet. Figures for Q1:20, Q2:20, and Q3:20 are –5.5%, –31.6%, and 31.0% respectively, and are cut off by the y-axis given the extreme fluctuations associated with the COVID-19 pandemic. Estimate for Q3:24 is based on the mean consensus estimate from FactSet. As of August 22, 2024.

  • With  earnings season wrapped up in August, investors will be watching the Federal Reserve’s FOMC meeting closely for color around a potential rate cut. 
William Winkeler
About the Author

Bill has more than 12 years of experience in the investment industry, most recently as Managing Director of Investments at a private wealth management firm. In his role at Confluence, Bill chairs the…

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