Introduction
Happy New Year! The content of our team’s annual letter is divided into four sections:
One: A reiteration of those fundamental philosophies we hold to be true in the world of financial planning and investing.
Two: A recap of the year from an investment perspective. As a reminder, we are not predictors of the market, and it would be detrimental to think anybody had that skill. However, I think it’s informative to look back on where we have been as further edification of the fundamental philosophies.
Three: Personnel updates and what we’ve been doing in 2024.
Four: Trevor’s written fireside chat.
Lastly, everything in this letter is my opinion based on my experience in this business, the research I have read, and my own understanding of what it takes to be successful. They are, however, my opinions and I’d be happy to discuss anything contained herein in more detail in our next meeting.
Unalterable Truths of Financial Planning/Investing
As many of you know, I celebrated my decade of time with Curi RMB Capital a year late by taking a sabbatical this summer. My family embarked on a six-week journey, and, when it was done, we only spent 6 days at home! We had great adventures on hiking trails, swimming in frigid glacier water, playing beautiful golf courses, flying across the Atlantic, and exploring beautiful European cities. In all of this though, what I appreciated the most was the time spent with my daughters. It’s not about where you are or what you are doing, but who you are doing it with and how much time you are spending together. As the weeks rolled on, our family grew closer, understood each other more deeply, and loved more richly. When I came back to work, I understood with even greater clarity the importance of time in our lives.
The quote “It’s not about timing the market, but time IN the market,” took on greater significance for me upon my return. I’ve always told anybody who would listen that the best day to invest in the market was yesterday, and I’m doubling down on that going forward. The sooner you get on board with the Six Truths of a successful investor, the greater your opportunity for success. The Six Truths become more powerful the more TIME you spend practicing them. On that note, if you have somebody in your life you care about that is not practicing the Six Truths, please introduce them to us as soon as possible so we can help them to march confidently towards their long-term wealth goals. Without further ado, here are the Six Truths of successful investing:
The Six Truths
- Create an investment plan that is goals-focused
- Use your plan, not the market, to define your success
- Risk is only measured as the probability of not meeting our financial goals (i.e. running out of money!)
- Long-term commitment to equities is the single greatest risk reduction tool we can utilize
- Owning a small amount of “risk-off” assets creates the confidence to maintain a majority position in equities
- All market declines are temporary and should be opportunities for the disciplined investor
These rules are battle tested year in and year out and have yet to fail me or any of you. My team’s role is to provide a steady hand at the wheel in these tests. In the event you lose your confidence, we are the guides that push you back towards the path. We look forward to serving in that role for many decades to come, and, if we keep in mind the truths above, I am confident we will succeed.
“The sooner you get on board with the Six Truths of a successful investor, the greater your opportunity for success. The Six Truths become more powerful the more TIME you spend practicing them.”
2024 Markets Synopsis
While I was on sabbatical for parts of 2024, the equity markets were not! The S&P 500, led by technology stocks, finished 2024 up 24.54%, the Russell 2000 finished the year up 11.39%, the MSCI EAFE index was up 3.51%, and the MSCI EM index was up 6.5%. Interest rate cuts combined with continued advances and implementation of AI technologies and steadily increasing earnings numbers propelled the U.S. Large Cap markets considerably higher this year. It wasn’t entirely smooth sailing though, as the appetite for further interest rate cuts waned towards the end of 2024 and stocks pulled back accordingly after a post-election rally had pushed them to the highest levels ever achieved. In all this exuberance, it’s important to evaluate the relative price we are paying for these great companies.
To evaluate relative pricing, the figure we use most frequently is the forward price-to-earnings ratio. This ratio demonstrates the relative price you are paying for the earnings a company is producing. To put it plainly, the higher the number, the more “expensive” a company is; the lower the number, the “cheaper” the company is. (It’s obviously much more complicated than that, but for our purposes today it’s a good starting point.) The last observation is that different types of companies have historically held much different PE ratio expectations. For example, a company or sector where a great amount of growth is anticipated (NVDA for example) commands a high PE ratio (54.43 for NVDA), whereas a slower growing company (Bank of America for example) commands a low ratio (15.98 for BAC). When you take the weighted average of the forward PEs for the entire S&P 500, you can get a good idea of the relative expense levels of the market.
The current forward PE ratio for the S&P 500 is 24.19. A 10-year average is approximately 17 and a twenty-year average is 15.86. Without any further evaluation, you might be led to believe that today’s valuation is particularly rich and that 42% increase over the ten-year average is cause for alarm. However, that is where the number on its face can be misleading. Something very important has happened in the S&P 500 and the US economy in the last 10 years. Technology stocks made up 16% of the S&P 500 back in 2014, and today they comprise 34% of the index. The S&P 500 has become dominated by technology stocks, which has pushed out slower growth sectors of the economy like Consumer Staples, Energy, Financials, and Industrials. Just above, I told you that different sectors of the market have different forward PE expectations. With that amount of change in composition, we would expect a higher forward PE ratio to become the new normal for the index and the economy.
In conclusion, investing in Large Cap U.S. stocks via the S&P 500 has become an increasingly large bet on U.S. technology, and, therefore, the price we are paying for that extra growth potential must increase as well—hence the rise in forward PE ratios. I remain convinced that continuing to invest in these great growth-oriented U.S.-based technology companies will continue to produce the types of inflation-beating returns we need to earn to meet your long-term investment objectives. There are always economic setbacks on the horizon, but the forward PE ratio of the U.S. market should not be thought of as a deterrent to investing in great companies today!
2024 Team Updates
I am excited to announce two personnel changes taking effect in 2025. After six years of dedicated service on our local Milwaukee team, Molly Eggert has been promoted into a managerial role supervising our client service professionals on our national team. This is an exciting opportunity for Molly to grow her career and mentor the next generation of great service professionals. She will still be based in our Milwaukee office and wants you all to continue to say hi when possible.
To fill the void Molly’s promotion will create, we are transferring Nick Fameree from our office in Washington, D.C. back to his home state of Wisconsin. Nick is a Sr. Wealth Management Associate and brings years of experience serving clients in the D.C. area. I will make sure Nick gets introduced to everybody quickly in the New Year. If you had previously been going to Molly for requests, you can now send them over to Nick.
Brian Klein: Brian had a great year visiting with clients all around the country and building a great new swath of clients right here in Milwaukee. In the summer, you can find him camped out at coffee shops around Northern MKE as he hosts “Ask Me Anything” events where folks can come in and ask him financial questions on the fly. It’s been a fun way to help our local community and expand our team’s presence in Milwaukee. He continues to work hard providing quality advice in every interaction with our families. Brian spent his first full year of marriage doing work on their new house, traveling to New York City, a ski trip to Big Sky, and getting very active in his tennis and platform tennis leagues. He’s excited to deepen relationships with his community in 2025.
Reece Piotter: Reece had an incredible year as he began his CFP® exam preparation and even completed his first half marathon and got engaged on the same day in June! Reece and his fiancé, Allison, celebrated their engagement with a trip to Boston. On top of that he deepened his relationship with many of you in advice preparation and implementation. Reece has become an indispensable member of the team and his enthusiasm for the work is infectious. He will continue to build on his knowledge and skill set as he delivers and implements the advice we provide to all of you on the regular. Reece is excited for his CFP® exam this summer, his wedding to follow in September (he’s all ears for marriage advice 😉), and lowering his handicap index (hopefully) on the golf course.
Nick Fameree: Nick joins us from the D.C. office where he and his fiancée, soon to be wife, lived for the last three years. He is very excited to be moving back home to WI, having grown up in the Green Bay area. Nick attended the University of Wisconsin – Oshkosh, where he majored in Finance. He then served six years in the Marine Corps Reserves, which afforded him the opportunity to travel around the country and continue a legacy of family military service. He began his career at a smaller firm in De Pere, WI, where he worked for two years before moving to D.C. and joining Curi RMB Capital. Nick passed his CFP® exam this past July and is very excited to begin building relationships with our clients. Nick is also motivated to get back to some of the hobbies he grew up doing in Wisconsin, such as golfing and camping. Nick is an avid Wisconsin sports fan, and will appreciate any shared fandom of the teams, especially the Packers.
Trevor Isham: I just completed 12 years at Curi RMB Capital. It’s been five years since I’ve had a title change, and that’s great news as I love being the team’s Senior Wealth Manager, mentoring our team, meeting new families, and providing advice to our existing clients. As mentioned above, this summer was my sabbatical, and it turned out to be the greatest summer of my life! We explored the world together as a family and my wife and I even made a small golf escape. Time with our children is precious and I am so grateful to my company and to all of you for allowing me to spend that time with them. On the family front, my daughters are now 6, 8, and 10 years old. I love being a girl dad, but the teenage years are closing in and I don’t have my plan for that yet; any help or advice is appreciated! After an Achilles injury last year left me hobbled, I have recommitted myself to a workout and diet plan and I feel stronger than ever. I can’t wait to see you all soon!
Conclusion
Stay curious… yes, I know it’s our new company’s motto, and no, I’m not being paid extra to use it in my conclusion. Stay curious is my family’s motto for 2025 and it has much more to do with that famous darts scene in Ted Lasso than anything Curi has brought into my life. For those who haven’t seen it, stop right now, go to YouTube and search “Ted Lasso Be Curious.” Ok, now that you’re back, you understand what I mean. (Side note, Ted Lasso is a fabulous show that I certainly hope you might find the time to indulge in at some point.) I’ve decided that I don’t want to ever reach a point in life where I’ve “figured it out.” I want to continue to be fascinated by new ideas, invested in new technology, and open to being surprised by the world around me.
Ultimately, it’s easier to be a cynic or a critic than it is to be curious. In an age where new ideas are created and pushed into the world at lightspeed, it’s difficult to give them proper consideration… far easier to dismiss them out of hand. I have certainly fallen into that trap from time to time. The problem with dismissing an idea out of hand is that it doesn’t respect the person originating or propagating the idea at all. When we begin to view the world through a lens of “what if every person I ever encountered was an ally,” instead of “what if every person in the world was my enemy,” we can gain wisdom and ultimately joy from every interaction.
In my school’s baccalaureate address many years ago, my wise professor David Weddle urged us graduates to continue to allow ourselves to be “in awe” of the world around us. The world is miraculous and when it ceases to amaze us, we will become bored and complacent. Staying curious is the antidote to this boredom. Staying curious can allow us to be surprised, mystified, and excited about the ever-changing world we live in.
With this mentality, I want to continue to seek out new challenges, visit new places, and think through new ideas. I want to stay curious about my kids, my wife, my friends, my colleagues, my clients, and my work. I believe this curiosity will lead to better advice given at work, deeper relationships with my colleagues, clients, friends, and family, and an invigorating outlook on life continuing to be better. This won’t always be easy…I do believe my root programming is somewhere between critical thinker and cynic. I will need prodding and reminders, but I’m confident that with some efforts at mindful noticing I will be able to stay curious.
I hope some of you will take on this challenge with me. Stay curious about the people in your life. Stay curious about the ideas you encounter. Stay curious about the places you will visit and the experiences you will have. Let’s ask more questions, listen more deeply, and be less convicted in our rightness. I look forward to hearing about where that curiosity may take you this year and beyond.
As always, it’s my pleasure to serve as your trusted wealth advisor. I greatly look forward to the next time we are together. Thank you for spending your time reading these thoughts. If any of them prompt questions, please reach out to me or anybody on the team.
The opinions and analyses expressed in this presentation are based on Curi RMB Capital, LLC's ("Curi RMB ") research and professional experience are expressed as of the date of this presentation. Certain information expressed represents an assessment at a specific point in time and is not intended to be a forecast or guarantee of future performance, nor is it intended to speak to any future time periods. Curi RMB makes no warranty or representation, express or implied, nor does Curi RMB accept any liability, with respect to the information and data set forth herein, and Curi RMB specifically disclaims any duty to update any of the information and data contained in this presentation. The information and data in this presentation does not constitute legal, tax, accounting, investment, or other professional advice. Past performance is not indicative of future performance, and there is a risk of loss of all or part of your investment. This information is confidential and may not be reproduced or redistributed to any other party without the permission of Curi RMB. RMB Asset Management is a division of Curi RMB Capital.
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