As we move into the second half of 2024, the US economic engine is chugging along.

Strong growth in employment and wages has boosted disposable income for workers. Household net worth continues to climb, pushed up by stock market and house price gains. And consumers appear poised to enjoy summer with a sunny, ready-to-spend mood.

According to JP Morgan chief strategist David Kelly: “consumer spending will likely keep growing, although more slowly, in the months and quarters ahead, suggesting that it would take a significant shock elsewhere to tip the US economy into a recession.”

With sunny skies and no recession in sight, the investment environment for stocks has been hot.

The S&P 500 index of large company US stocks returned 15% in the first half of the year, and strong performance by a handful of big tech companies contributed about two-thirds of the index’s return.

So far in 2024, the S&P 500 Index has made a record high 33 times. The Nasdaq 100 index, which has a large weighting to technology stocks, has made a record high 23 times.

Foreign stock market returns have been less ebullient but still positive. The MSCI’s Europe, Australasia, and the Far East (EAFE) Index has gained 5.8% year-to-date through the end of June.

Here's a chart from Bloomberg that puts the current stock market rally into historical perspective.

The S&P 500 has posted an 85% advance since 2019 (red line), even despite some challenging stretches, like “Pandemic” 2020 and “Inflation Scare” 2022.

Compare this to the 238% rally during the last five years of the Roaring Twenties (black line) in the previous century, and the 220% climb of the 1990s Internet Bubble (green line).

When viewed from an historical perspective, the current bull market appears to be more run-of-the-mill than exceptional, and less likely to be cited as an example of irrational exuberance that led to an inevitable bursting of a bubble.

The bond market has been a far chillier place to invest so far this year. Short-term bond returns have been in the range of 1-3%.

However, doubts and worries persist about the direction of intermediate-term interest rates. Most recently, market participants are raising concerns about the Federal government’s budget deficit, inflation, and the outcome of the 2024 Presidential election.

Intermediate term investment grade bond yields have risen year-to-date, which means returns for many bonds with maturities beyond three years have been negative so far in 2024. If current bond market trends persist, intermediate-term bonds could post another down year, which would mean losses in three of the last four years.

Here's a snapshot of stock and bond performance for the last six quarters:

We’ve decided to take a break from the usual monthly letter fare and share what we’re reading now or have enjoyed recently.

We hope you can find time to relax both mind and body during the summer season. And if you enjoy reading, we’d love to hear what’s on your list!

The Heaven & Earth Grocery Store: A Novel by James McBride

Chicken Hill is a run-down neighborhood of Jews and African Americans in Pottstown, PA. This is a rich, compassionate story of characters whose lives intertwine.

The story revolves around two key dramas: the institutionalization of a deaf boy in a home for the mentally ill, and the discovery of a skeleton at the bottom of a well. The author weaves a story that shows us that even in dark times, it is love and community—heaven and earth—that sustain us.

North Woods: A Novel by Daniel Mason

I often find myself thinking about life and our earth on a large scale. Where do we as humans fit in with the incomprehensible and fleeting passage of time? What is my individual relationship with this world and what impact am I having on our planet? But then again, I am a dreamer.

In North Woods: A Novel by Daniel Mason, we are taken through passages of time that involve centuries, in a western Massachusetts town. The history of inhabitants of a cabin and what becomes of the land and home is revealed over time.

Mason's writing has a kind of magical quality which pulls you in with details of nature and wildlife and invokes a sense of wonder about small moments in time as well as vast passages of time, dispersed with some humor as well.

Through introspection, Mason examines the depths of life, love, and transgressions through the portrayal of the spirits of the inhabitants of the land. The mystical aspect of his story will take you to another world - a great story for a summer read.

-Donna

The Passage by Justin Cronin

As a high-schooler, I discovered the writing of Stephen King. I have a distinct memory of a summer in the mid-1980s, where I worked evening shifts, would often return home after midnight, and read The Stand through the dark hours until dawn. Consuming what at the time may have been considered King’s masterwork was made particularly memorable because of my weeks-long, vampire-like existence.

Now deep into middle age, I’ve been drawn in by a King-like author who writes about vampires. Justin Cronin has created a science-experiment-gone-wrong, post-apocalyptic world where an engineered virus nearly wipes out humanity. The unleashed walking dead are far more treacherous (and intriguing) than zombies.

The Passage was written in 2010 (the first of a trilogy) but the subject matter manages to tap into abeyant concerns of today’s post-pandemic reality. While the plot itself is absorbing (and wonderfully haunting), the masterful writing delights. At various points, characters debate the reasons for persisting in a seemingly forsaken world. How apropos.

-Rob

The Long Walk by Stephen King (as Richard Bachman)

I am a lazy reader – if I don’t like a book within the first ten pages, I won’t flip to the eleventh. This was most certainly not the case for The Long Walk, as I turned to the last page the same day I turned the first.

The visceral elegance of King’s prose leaves the reader feeling as if they are a fly on the wall, observing every horrifying detail of each character. Set in a dystopian future in Maine, 100 teenage boys embark on a walk down Route 1; if they walk too slow or stop, they are gruesomely removed from the contest.

The last walker standing wins a considerable amount of money and a prize of his choice. Sure, the premise of the walk itself is compelling, but the real story lies in the interactions of the boys. Though a perhaps on-the-nose metaphor for the true cost of sacrifice to get ahead in an ever-competitive world, The Long Walk is an intriguing read.

-Greg

10% Happier: How I Tamed the Voice in My Head, Reduced Stress Without Losing My Edge, and Found Self-Help That Actually Works by Dan Harris

Harris was an ABC reporter, and sometime host of Nightline, who had a panic attack on national television while reporting on Good Morning America.

The first part of this book is an entertaining story of how he searched his way through various paths in spirituality and self-help to try to get control.

10% Happier takes readers through his explorations of neuroscience and other disciplines that led him to a meditation practice that provides him with calm, focus, and a little more happiness.

-Susan

A Walk in the Woods: Rediscovering America on the Appalachian Trail by Bill Bryson

As a lifelong New Englander, and an avid hiker in my early twenties (a fraction of what time I expected my hiking experience would be), I have always been amazed by all of nature around us.

Although my love for the ocean competes with the mountains of New England, I find myself drawn to stories of wilderness experiences in the mountains.

Bill Bryson takes us through the fascinating history of the Appalachian Trail, along with some forestry history, as he tells the tale of a quintessential story of two men, not exactly at peak fitness, and far past twenty, as they head out to take on the arduous task of hiking the Appalachian Trail.

Bryson brings a laugh out loud sense of humor with his writing, and weaves in a balance of environmental awareness at perfect intervals throughout the story. This is balanced with detailed accounts of the angst and emotions of human beings as he and his companion face the real perils of the wilderness.

So, as we near the middle of hiking season in New England, if you are looking to get inspired to experience some of the unexpected, challenging, and life-changing adventures of hiking all or any of the 2,200 miles of the Appalachian Trail that traverses an area from Georgia to Maine, Bryson’s A Walk in the Woods is a must read for summer.

Or, it may even make your daily walk, or a local hike, seem like a walk in the park, and you can live the experience of the AT vicariously through Bryson’s brilliant account of his own experiences.

-Donna

These Truths: A History of the United States by Jill Lepore

My annual personal knowledge project, beginning around Independence Day, is to read a substantive work focused on US history.

Presidential biographies and early American history are a recurring favorite and occupy significant space on my bookshelves, from the likes of Chernow, McCullough, and Philbrick. While all learned men and accomplished authors, I acknowledge that Ron, David and Nathaniel may be interpreting history through lenses that might reveal similar perspectives.

This year I’ve decided to branch out and, for starters, choose an author born in the second half of the 20^th century. I landed on These Truths, written by Harvard professor Jill Lepore. The author takes on the herculean task of writing a history of the United States, from 1492 to present day.

In her introduction, Lepore tells the story of how the US Constitution was circulated before being put to the vote, and how the essential question posed anonymously by Alexander Hamilton in the first essay of the Federalist Papers, was: shall we be ruled by reason and choice, or shall we be ruled by violence and force?

Lepore contends that this is the question of American history and remains as pertinent and important today as it was in 1787. And although there is a great deal of anguish in American history, Lepore finds “an extraordinary amount of decency and hope, of prosperity and ambition, of invention and beauty.”

I suspect it will take the better part of the summer for me to digest the 900+ pages of Lepore’s work. But in a shift from my usual summer read of focused biography, I’m looking forward to experiencing her interpretative, wide-scope, fresh-perspective narrative.

-Rob

How Not to Be Wrong: The Power of Mathematical Thinking by Jordan Ellenberg

However, upon reading, it will ensure your errors are backed by logic. Filled with real-world examples of fallacies, corrections on common statistical mistakes, and rebuts of common arguments, How Not to Be Wrong makes you think about how you think.

Ellenberg breaks down key concepts for you into their essential aspects. Pertinent and applicable, How Not to Be Wrong leads to greater understanding of the world in which we live.

The Price You Pay for College – An Entirely New Road Map for the Biggest Financial Decision Your Family Will Ever Make by Ron Lieber

Having a lengthy and detailed background in Higher Education and helping families navigate college, when I find a resource that truly gives helpful advice about how to approach costs realistically, I love to share it.

Lieber’s book helps demystify a lot of the college application and admissions process and identify truths, which are not all transparent for parents and college bound students, to say the least.

Some of this knowledge you would be hard-pressed to learn if you are not an “insider” or someone like Lieber, who makes it his job to understand the complexity and nuances of paying for college and shares his knowledge with the world.

He brings practical advice with a sense of compassion and understanding. In a system where costs are rising to unfathomable amounts, it makes sense to use resources to help provide a calm, prepared approach to paying for college, and Lieber helps in a realistic way with the details he shares in his book.

His last chapter is even about hope. And I share his sentiments - the hope that more (and better) resources for families trying to navigate college costs and decisions will lead to the best outcome for every student and parent.

-Donna

A Wealth of Well-Being: A Holistic Approach to Behavioral Finance by Meir Statman

During one of my evening commutes from Belmont to Duxbury, I selected a podcast for some work-lite listening. The Long View, produced by Morningstar, the investment research company, releases mostly nerdy stuff that only advisors could possibly love.

I figured an episode entitled The Biggest Risks in Life Are Not in the Stock Market might offer a departure from the typical economic / market / business / analytic programs the crowd my Pocket Casts app.

The interviewee, Meir Statman, who is a serious academician at Santa Clara University, said at the outset: “If you want real risk, get married. And if you want more, have children.” I was immediately hooked.

It became clear during the episode that Statman has a passion for teaching about behavioral finance, thinking holistically, and promoting financial well-being.

In the book, as well as on the podcast, Statman’s sense of humor, compassion, and wisdom are evident as he explains his thesis: we need financial well-being to enjoy life well-being, but it is life well-being that we seek. And life well-being has many domains, including those of family, friends, health, work, education, religion, and society.

Statman contends: “Financial well-being comes when we can meet current and future financial obligations, absorb financial setbacks, and keep driving toward financial goals, such as adequate retirement income. Life well-being comes when we live satisfying lives, full of meaning and purpose.”

This book is an important one for those who provide financial advice, laying out a kind of evaluative framework and providing insight on how to understand clients’ critical needs, wants and wishes. It’s also written in a compelling, approachable way for individuals who are curious about behavioral finance and seeking a clearer path toward life well-being.

-Rob

Your Essential Guide to Sustainable Investing by Larry Swedroe and Samuel Adams.

Since the start of my internship, I have learned that half of the knowledge requisite to work in finance is knowing financial acronyms and jargon. I say this jokingly, however I do believe that there is a kernel of truth to it – particularly in the space of sustainable investing.

Your Essential Guide to Sustainable Investing makes complex and multifaceted concepts, like Environmental, Social, & Governance (ESG) ratings, Socially Responsible Investing (SRI), and Impact Investing, digestible and approachable.

As explained by Swedroe and Adams, sustainable investing empowers investors to quite literally put their money where their mouth is by way of aligning one’s values with their investments, without sacrificing financial returns.

Becoming familiar with the ins and outs of sustainable investing terminology and investment management approaches, and how it all may impact one’s portfolio can only benefit the curious and engaged investor, and Your Essential Guide to Sustainable Investing is a great place to start.

-Greg

Happy Independence Day!

Rob