2024 Year End Letter

Financial markets had another very good year in 2024, as all the major asset classes generated positive returns. However, there was a high level of bifurcation in returns both within and across asset classes. Large U.S. stocks led the way once again, as the S&P 500 Index was up over 23% (excluding dividends). This is the first time since 1998 that the S&P 500 has gone up more than 20% in two consecutive years, and it is now up over 65% since its most recent bottom in October 2022. A broader view of equities paints a favorable, but less remarkable picture. Smaller U.S. companies (as measured by the Russell 2000 index) were up only 10% in 2024 (25% in two years), and international stocks (as measured by the MSCI ACWI Ex USA index) were up only ~3% for the year (15.5% in two years). While bonds were performing well through September (up 4.4%), rising interest rates during the fourth quarter (the 10-year Treasury yield was up nearly 80 basis points) drove a 3%+ decline in bond prices resulting in a 1.3% gain for the year for the Bloomberg Barclays Aggregate Bond index. Our bond portfolios generated a return of closer to 3% for the year, despite this challenging rising rate environment.