Q3 Newsletter & Market Review

Hi All, 

Welcome to the Q3 newsletter & market review.  Fall is officially here!  I hope everyone enjoyed their summer and had a chance to take a break from work to recharge.  My wife and I took our kids to Disneyland to kickoff the summer break (picture below).  We also spent a few weeks in Washington visiting family.  Last month, Stride Financial Planning turned three years old!  I'm very grateful to my clients for their business and continued support.   

Q3 Market Performance 

The third quarter was a welcomed break from the volatility that we experienced earlier in the year paired with very nice gains.  The S&P 500 notched several new highs during the quarter.  Year-to-date the S&P is up 14%, hopefully on its way to a strong year. The international index has been very strong this year up 26%, which is why diversification is so important inside of your investment portfolio.  In recent years international equity has lagged behind US equities.  Furthermore, if we zoom out 5 years the S&P has returned nearly 100%.  Over that same span the international index has returned 42%.  This has caused many investors to neglect International funds in their portfolios.  Balance and diversification is key. 

Year-to-date Returns 

S&P 500 +13.48%

Total Market +12.97% 

Tech +17.17%

Mid Cap +4.44%

Small Cap +2.71%

International +25.11%

Rate Cuts 

September brought the first rate cut by the Federal Reserve in 2025.  The Fed cut the federal funds rate by 25 basis points.  The market is pricing in two additional cuts this year.  What does this mean for you?  If you have a high yield savings account you will start to see the yield decline.  Interest rates on credit cards may begin to come down.  Mortgage rates could potentially begin to decline.  Many of my clients will be interested in refinancing their homes if rates drop.  Mortgage rates are tied closely to the 10-year treasury.  The 10-year treasury is a good indicator of expected future economic growth and inflation.  The Fed cited a weak jobs report for its decision to cut rates in September.  Inflation has held steady hovering slightly higher than they would like.  We’ll closely monitor how that impacts mortgage rates.     

Thoughts 

This year has highlighted the importance of diversification in your portfolio.  While it has been a strong year thus far across the board, international has been exceptional this year up 26%. The S&P is on track to finish above its average.  As an investor, you want to own a little bit of everything, particularly in retirement.  It helps reduce risk and smooth out volatility.