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CLA Outlook — Key Insights for Sound Financial Strategies

Take steps to prepare for changing scenarios.
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June 30 Weekly Insights
Markets are resilient with the U.S. military becoming involved in the Middle East
Over the past 35 years, markets have been mostly resilient following the start of U.S. military conflicts in the Middle East. From a macro perspective, oil moves higher just before the escalation on fear of supply disruption, though U.S. military presence and coordination with allies helps to keep oil prices controlled. Maintaining a high-quality, U.S.-centric equity allocation helps navigate geopolitical escalation.
Equities look more richly valued when valuations are adjusted for future earnings growth
Rich valuations and continued divergence between price and earnings growth is a large reason why CLA has scaled back our subsequent five-year equity return estimates. Small cap stocks and high dividend yielding stocks look attractive from a valuation standpoint, but only high dividend stocks have five-year earnings growth projections at their median level.
Challenges remain in private equity, but there are signs of life
Uncertainty and the Federal Reserve’s reluctance to cut interest rates continue to put pressure on any sudden resurgence in activity across the private markets, but investors in older private equity should start to see distributions slowly pick up throughout the year.
 
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Tune in to the second-quarter session of the CLA Outlook as we discuss timely topics around policy, the economy, and year-to-date market performance.
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Strategic Steps
5 Actions Portfolio Owners Should Take Considering Market Volatility
During uncertain times, successful investors take strategic steps to prepare for varied scenarios. Explore key actions you can take to navigate these periods:
  • 1. Review your asset allocation
    Align your portfolio with your long-term goals and risk tolerance.
    Consider rebalancing your portfolio to maintain your desired asset allocation.
  • 2. Harvest tax losses
    Take advantage of market downturns to sell investments at a loss, which can offset gains and reduce your taxable income.
  • 3. Make Roth conversions
    Converting traditional IRA assets to a Roth IRA during market dips can be beneficial, as you may pay taxes on a lower account value.
  • 4. Put excess cash to work
    If you have cash reserves, consider investing in opportunities aligning with your financial strategy. Money market accounts may be an attractive option for investors seeking a higher return rate on their cash reserves while maintaining liquidity and low risk.
  • 5. Consider gifting strategies
    Use market volatility to make strategic gifts, potentially reducing your taxable estate while benefiting your beneficiaries.
  • We can help
    No matter your financial position, incorporating sound tax and wealth advisory could help you achieve more. We are here to guide you to a more comprehensive approach.
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