January 2025 Newsletter

Dear friends,

As we begin the new year, we trust the momentum of the previous 2 years can continue. Economic optimism is rising and technological advancements will drive domestic growth. We hope you all had a great 2024 and, as always, please reach out with any questions you may have.

By, Jaysen Bohrod, CFA

Market Commentary

2024 was a year marked by resilience in global equity markets, despite ongoing concerns over macroeconomic conditions, geopolitical uncertainties, and inflationary pressures. After 2023, when interest rate hikes and slowed growth created volatility, we saw more of a stable environment for 2024 as the tightening cycles came to an end and led to a favorable environment for risk assets.

The U.S. equity market, represented by major indices like the S&P 500 and the Nasdaq Composite exhibited continued strength in 2024. The S&P 500 returned 25%, while the technology dominated Nasdaq Composite returned 32.957%. The Magnificent Seven, which includes Apple, Nvidia, Microsoft, Amazon, Alphabet, Meta and Tesla, has continued its dominance of the S&P 500, growing to represent about one-third of the market capitalization at the end of the year from about 20% at the beginning of 2023 and accounting for more than half of the gains in 2024. The broader market benefited from the Artificial Intelligence momentum we have seen over the past 2 years. Corporate earnings in the U.S. are showing resilience and are continuing to grow despite inflationary pressures keeping input costs elevated. Outside the U.S., equity markets in Europe were muted. The STOXX 600, which measures European stock performance, ended 2024 with a 5.9% gain. Sluggish productivity and inflation kept a cap on the upside potential.

Central banks maintained a “higher for longer” stance in 2024, with rates stabilizing towards the end of the year. The 2 year U.S. Treasury started the year at 4.25%, rose to just over 5% at the end of April, fell to 3.5% at the end of October, and finally ended the year at 4.25%. The 10 year U.S. Treasury Note started 2024 yielding 3.866% and followed a similar volatile path to the 2 year note, ending the year at a rate of 4.57%. For the past two and a half years, the 2 year U.S. Treasury rate was higher than the 10 year U.S. Treasury rate, which as discussed in the past, signified an inverted yield curve. Investors were demanding higher rates for the short term due to inflationary pressures and other uncertainties. With inflation easing and interest rates stabilizing, the yield curve “uninverted” and began to steepen by December, indicating investor expectations of continued Federal Reserve interest rate cuts.

Oil prices were largely stable in 2024, remaining range bound between $75 and $90 per barrel as global demand and OPEC+ production decision balanced out. Gold prices reached all time highs during the year of $2,790 per ounce, returning 27.2%, while Silver finished the year at $28.90, returning 21.5%. Prices clearly benefit from investor flight to safety amid inflation and geopolitical uncertainty.

Looking forward, markets are very likely to remain influenced by central bank policies, economic growth trajectories and geopolitical developments. Earnings growth will be critical for equities in 2025 as valuations are at all time highs, supported by a 30.205 price to earnings ratio on the S&P 500 compared to the historical average of about 20. Fed Policy, in terms of the size and timing of rate changes, and inflation will be key drivers of the bond market’s performance. Commodities prices, including oil and precious metals, are likely to remain volatile, with OPEC+ policy and other geopolitical concerns front and center.

In conclusion, 2025 could see continued growth in some areas as long as inflation continues to cool and central banks can support economies while minimizing risks of a recession.

NUMBERS TALK

United States National Debt…………………...………………………………………....$36.4T
30 Year Fixed Rate Mortgage………………...…………………………………………..6.96%
US Gross Domestic Product…………………………..…………………………………$29.6T
Total Credit Card Debt Held in U.S…………………………...…………………………$1.35T
Number of Electric Vehicles Sold in the U.S. in 2024……………………………………..1.3M
Cost in 2024 for the U.S. Mint to produce a penny……………………………………..$0.0369
U.S. Crude Oil production per day in barrels…………………………………………...13.48M

Steps You Can Take to Help Protect Your Accounts

Use two-step verification. This security feature requires that you enter a unique security code whenever you access your accounts online, making it more difficult for someone to gain access to your information.
Secure your passwords. Using password manager software makes it easier to manage your login information across websites—and helps you create strong and unique passwords. Additionally, adding a verbal password to your Schwab accounts is another layer of protection. This is an effective security measure to prevent a successful and/or prevented fraud attempt. For assistance contact Schwab Alliance at 1-800-515-2157.
Use biometrics where available. If your smartphone or PC offers biometric security options like a fingerprint reader or voice or facial recognition, we recommend using those features. They add another unique layer of security that could stop financial criminals in their tracks. We highly recommend that you enroll in Schwab’s Voice Identification. For assistance contact Schwab Alliance at 1-800-515-2157.
Do not click on links in emails and texts. Online financial criminals try to make their emails or texts look legitimate. Be skeptical of all emails, texts, and any included links and attachments unless you are 100% certain that the email or text is legitimate. You can send suspicious emails or texts to Phishing@schwab.com.

WE'RE MOVING TO A NEW LOCATION!

As of March 15, 2025, our office will be at:

Pegasus Asset Management, Inc.

44 Whippany Road, Suite 101

Morristown, NJ 07960

All phone numbers & email addresses remain the same.

Stock Market Holidays

Martin Luther King Jr. Day—January 20^th

President’s Day — February 17^th

Good Friday—April 18^th

Schwab Alliance

schwaballiance.com/
Schwab Mobile App
1-800-515-2157

Secure, online access to your accounts is easy, visit the Schwab Alliance website or Schwab Mobile App to view account balances & transactions, access tax documents, open new accounts, and more.

Please remember that past performance is no guarantee of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Pegasus Asset Management, Inc. [“Pegasus]), or any non-investment related content, made reference to directly or indirectly in this commentary will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this commentary serves as the receipt of, or as a substitute for, personalized investment advice from Pegasus. No amount of prior experience or success should not be construed that a certain level of results or satisfaction if Pegasus is engaged, or continues to be engaged, to provide investment advisory services. Pegasus is neither a law firm, nor a certified public accounting firm, and no portion of the commentary content should be construed as legal or accounting advice. A copy of the Pegasus’ current written disclosure Brochure discussing our advisory services and fees continues to remain available upon request or at www.pegasusassetmgt.com. Please Remember: If you are a Pegasus client, please contact Pegasus, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. Unless, and until, you notify us, in writing, to the contrary, we shall continue to provide services as we do currently. Please Also Remember to advise us if you have not been receiving account statements (at least quarterly) from the account custodian.

Historical performance results for investment indices, benchmarks, and/or categories have been provided for general informational/comparison purposes only, and generally do not reflect the deduction of transaction and/or custodial charges, the deduction of an investment management fee, nor the impact of taxes, the incurrence of which would have the effect of decreasing historical performance results. It should not be assumed that your Pegasus account holdings correspond directly to any comparative indices or categories. Please Also Note: (1) performance results do not reflect the impact of taxes; (2) comparative benchmarks/indices may be more or less volatile than your Pegasus accounts; and, (3) a description of each comparative benchmark/index is available upon request.