January 2024 Newsletter

Ballew Wealth Management

Happy New Year

Thank you all for being our clients. We appreciate every one of you! 2023 is now behind us. As with every new year, there has been no shortage of predictions for 2024. Superbowl and Presidential election bets will depend on whose opinion you are reading. There is no shortage of “climate change” forecasts. Since that could be hotter OR cooler, it seems a safe bet. And of course, the demise of the balanced portfolio has been widely prophesied. Its imminent death has been written about in several financial publications; Most of the proposed changes to the old balanced portfolio have centered around adding “alternative” investments (these are the ones many advisors and much of the investing public do not understand.) Investors and advisors have been concerned about low yields in fixed income which have lasted for over a decade. Action needed to be taken, or did it?

What a couple of years can do! Not only is fixed income back, but a case can potentially be made for allocating more of a portfolio towards fixed income components for the next two or three years. And why do I write this?

Note: Please do not change your allocation in a vacuum. Speak with your advisor as every investor has a different risk tolerance, timeline, and where they are in the distribution phase or accumulation phase.

Let me share some reasons:

Over the last five years the S&P 500 has annualized 15.69% while some of the bigger fixed income funds have averaged less than 2% over the same period. So, if only returns are considered, the historical average of the S&P is certainly better. However, after the abysmal performance of the bond market in 2022 resulting from the combination of inflation and rising interest rates, fixed income is much more attractive than it has been in a long time. Currently fixed income funds yield in the 5% to 8 % range depending on what type of fixed income you are investing and the duration. These types of yields have not been around for quite a long time. Given the historically lower risk (primarily because of set maturity dates and scheduled interest payments) in fixed income versus equities, this could be a suitable time to add. As I write this, the consensus around the future of interest rates is that the Fed will likely reduce rates later this year. This would also be a big benefit to fixed income investors as rates have an inverse relationship to the value of fixed income securities. Nonetheless, I am reminded of a seminar I attended in 1988 (that is a long time ago) where the keynote speaker started by announcing, “I will tell you at the end of my speech what interest rates will do in 1988.” We were all on the edge of our seats. He concluded his remarks by telling us,” Interest rates will go down, they will go up and they will move sideways but not necessarily in that order.” In other words, no one knows for sure!

True then and true now.

There are some caveats regarding owning fixed income, particularly of the mutual fund variety. Fund flows vary and if a fund has too many liquidations in a short amount of time (similar to a run on the bank), the manager could be forced to sell investments sooner than they would like and this could impact both yield and total return. We could potentially have a” hard landing” in the economy and the higher yielding fixed income investments could suffer defaults which would negatively impact yield and cause losses. Again, do not do this alone. Contact your advisor.

It is hard to write a newsletter without adding a chart. The chart below reflects historical rates of returns on fixed income after the Fed pauses. Definitely food for thought.

And speaking of food, some of you liked getting recipes in our newsletter which have zero to do with investments. Below is my mom’s marinade for beef. We use it every Christmas on beef tenderloin. Mom was a caterer and passed away in 2009, so I do not think she would object to my sharing. I know there are purists among you who use only salt and pepper on red meat; for the rest of you, Bon Appetit, and good investing to all of you.

  • 1 1/2 cups of Canola
  • 3/4 cup soy sauce
  • 1/4 cup of Worcestershire sauce
  • 2 teaspoons of Dried Mustard
  • 1 teaspoon of Salt
  • 1 tablespoon of coarse black ground pepper
  • 1/2 cup of Red Wine Vinegar
  • 1 1/2 teaspoon of dried parsley flakes
  • 2 cloves of Freshly Crushed Garlic
  • 1/3 cup of Lemon Juice


Brooks Mosley

January 12th, 2024


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