January 2025

“Be curious not judgmental.” -Ted Lasso (not Walt Whitman)

Happy New Year! I'm happy to report on another very successful year in our shared pursuit of your most cherished lifetime financial goals. Our plan and our portfolio continue to be driven by those goals, rather than by prognostication around the economy or the markets. This will continue to be the case in the coming year, and beyond.

I begin by restating some of our core beliefs and proceed to a few comments about the current economic/financial backdrop.

General Principles

We are long-term, goal-focused, plan-driven investors. Our core investment policy is to invest in broadly diversified portfolios of high-quality businesses.

We believe that the economy can't be consistently forecast, nor the markets consistently timed. We conclude from this that the only practical way to capture the premium long-term return of equities is to ride out their frequent, sometimes significant but historically always temporary declines.

We do not react to economic or market events. As long as your long-term goals remain unchanged, so will our plan for the achievement of those goals. Stick to the plan!

Current Commentary

Powered largely by a very few of the very largest technology stocks, the past year was another exceptionally good one for the diversified equity investor. As the year came to a close, the market gave evidence of broadening out to some extent. That would certainly be welcome.

The presidential election result was at least clear and uncontested. The economic backdrop continued favorably. The job market remained fairly strong, though showing signs of cooling due to relatively stringent monetary policy. Corporate earnings and dividends reached record highs and are forecast to increase further in 2025.

If anything, late in the year many investors feared that the equity market had gotten ahead of itself, as evidenced by somewhat stretched valuations. Since valuations have never proven to be a reliable timing tool—any more than anything else has—we encouraged clients to just keep on keeping on with their plan.

Inflation has not gone away. Nor, as Fed Chair Powell observed in mid-December, is it going away. A frothy market took this statement rather badly, as indeed it should have, in our opinion.

And while the fiscal condition of the United States remains undeniably appalling, the consumer is (perhaps surprisingly) in very good shape. The household debt service ratio (debt payments as a percentage of disposable personal income), at 10.1% in the third quarter of 2024, is near 40-year lows.

It doesn't seem reasonable to suppose that the broad equity market can go on indefinitely compounding at the nearly 16% it's been producing since the March 2009 Global Financial Crisis lows. Nor do we need it to. Our long-term plans assume the hundred-year return of the S&P 500 at around ten percent.

Let me leave you with my thoughts for the new year. We wish all our clients and friends—because to us they're the same—a healthy, happy, and prosperous 2025. We're always here to answer your questions or address your concerns. Thank you for being our clients. It is a privilege to serve you.

February 13, 2025, is Giving Hearts Day. Founded in 2008, Giving Hearts Day is a 24-hour event for charities in North Dakota and northwest Minnesota. Each year, Giving Hearts Day provides a platform for charities to fund their missions through an ever-increasing community of donors, many of whom get to experience the joy of giving for the first time. The longest-running giving day in the country, Giving Hearts Day has helped participating charities raise $195 million since its founding. To see the smorgasbord of participating charities involved visit www.givingheartsday.org.

Have a super day!

Sincerely,

Brien Krank

Financial Advisor, RJFS

Senior Portfolio Manager

Managing Partner – Collins and Krank

Hear me on the radio Wednesday mornings from 7:35 to 7:55 on 1100am The Flag and 970am WDAY.

Raymond James and its advisors do not offer tax advice. You should discuss any tax matters with the appropriate professional.

Opinions expressed are those of Brien Krank or of the author in the attached articles and not necessarily those of Raymond James. All opinions are as of this date and are subject to change without notice. There is not guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Past performance does not guarantee future results. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Individual investor’s results will vary. Raymond James is not affiliated with Nick Murray, Federated Hermes, or First Trust. Links are provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize, or sponsor any third-party website or their respective sponsors. Raymond James Is not responsible for the content of any web site or the collection or use of information regarding any web site’s users and/or members.