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Apollo Lupescu, Ph.D, on Key Investor Concerns in 2024

February 27, 2024 | By Wealthstream Advisors Team
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Our team at Wealthstream Advisors was excited to host Apollo Lupescu, Vice President at Dimensional Fund Advisors, for a special live event in New York on January 30. 

Apollo truly lived up to his reputation as the “secretary of explaining things,” as he delivered an impressive depth of insight on some of the most pressing issues for investors today. His talk was engaging, entertaining and highly educational. 

We extend our sincere thanks to Apollo for leading this outstanding discussion.

We would also like to thank our attendees for submitting some thought-provoking questions and helping to make this event a great success. Below, we would like to share a few representative topics from his presentation. 

Key Perspectives from Apollo’s Presentation

The highlights below illustrate the extraordinary range of topics covered in Apollo’s presentation.

"Magnificent 7” Stocks in 2023

In 2023, the S&P was up 26%, well over the long-term average return of about 10% per year. However, a large portion of this return was generated by the 7 largest companies that make up 28% of the S&P 500 index: Apple, Microsoft, Nvidia, Amazon, Alphabet, Meta, and Tesla. These “magnificent 7” stocks generated an average return of 105%, compared to 15% for the other 493 companies.

While these outsized returns may cause many investors to wish that they had focused on these top companies, Apollo provided some longer-term perspective: go back one year, and the same stocks were down 45% compared to 18% for the market. 

Historical Context on US National Debt

Should investors be concerned about the US national debt? For reference, it reached $31 Trillion in 2023 but was only $4 Trillion in 1990. Apollo noted that debt as a percentage of GDP is actually lower today at 2.4% versus 3.1% in the 1990s. 

The fiscal impact of interest payments is also mitigated by the fact that much of the debt increase was issued between 2008 and 2020, when interest rates were virtually 0%.

Apollo argued that the interest paid on debt as a percentage of GDP is the most important data point for investors, because the government can issue more bonds to effectively refinance its debt. However, it cannot miss interest payments as doing so will impact its credit rating and perceived risk.  

Political Impacts on Market Performance

As we enter an election year, many investors are understandably concerned about how political shifts may impact markets. Apollo provided an interesting review of market performance under the previous eight presidential administrations. 

His conclusion? Annualized returns for the S&P 500 do not vary significantly based on the party in control. Apollo argued that this conclusion simply makes sense: the President has little control over the macroeconomic events that have the greatest impact on the market.

What happens to the return if one party has a majority in the House, Senate, and White House? The average return is the exact same down to the second decimal at 14.52%.

How should the state of markets in 2024 shape your financial plans?

While the topics above are only a small sample of Apollo’s presentation, they illustrate why his perspective is a natural fit for Wealthstream Advisors. We believe investors are best served by focusing on the long-term, minimizing reactions to day-to-day events, and staying the course with a financial plan that is carefully aligned with your personal goals.

If you have any questions or concerns about any of the issues highlighted above, we are always here to help. We invite you to schedule a one-on-one session with one of our advisors.

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