Last week, we covered new and evolving trends in financial markets, including changes investors should embrace when market preferences shift. As financial advisors, we equally discourage excessive trading and static “buy and hold” portfolio neglect. Both carry “opportunity costs” and may result in leaving money on the table.

However, staying true to a predetermined portfolio design does not mean it has to remain stagnant. Planning and performing substitutions among and between asset classes according to developing investor preferences, over a long investment horizon, can bolster the creation of wealth.

Fortunately for everyone (including us), many investors rely on financial advisors to monitor trends and provide information. Our main mouthpiece is the Van Wie Financial Hour radio program, which provides us a weekly platform to share what we are witnessing in markets.

Live radio also affords the public an opportunity to comment and question in real time, using the telephone lines that are provided at no cost to listeners. Since the beginnings of the Van Wie Financial Hour in 2015, our policy has been to prioritize callers ahead of our own discussions. We also provide answers to questions submitted via email or text to Strivus Wealth Partners, the owner and sponsor of the show.

For many months, shifting preferences have been especially evident in the Technology Sector. While there is no one date where Artificial Intelligence (AI) became available to the public, the major event that changed market preferences was the launch of ChatGPT in 2022. Unsurprisingly, AI’s accessibility was met with guarded, but significant, optimism. With increased usage, demand for semiconductors (“chips”) exploded, driving growth among big chip manufacturers, including Nvidia (NVDA) and Taiwan Semiconductor (TSM). Their stock prices soared. Until they didn’t.

NVDA’s stock fell sharply in a short time, and that volatility upset many investors. Far too many stockholders had bought into the steep rise, and some bailed out when the sudden decline became a pattern. These people were chasing returns. Many lost significant value by purchasing a hot stock, followed by making panic sells well into the decline. Buy high, sell low = bad idea.

An offshoot of the AI craze has been rising popularity for the Utilities Sector, as demand for electricity has created opportunities. Increasing portfolio allocations to participate in this growth industry has been rewarding.

Several studies (some still ongoing) are revealing that long-term investment results increase with a competent advisor, adding about 2% to 3% average annual returns. Diligence is often its own reward, and we can help.

Market Sector Rotation is happening now. Every so often, investor preferences undergo a seismic shift. What’s hot tomorrow can be a far cry from what was hot yesterday. We’re not talking about selling “Company A” stock to buy “Company B” stock. As investment managers, we seldom get involved with individual stock issues. The market is just too fickle to predict with any confidence the coming success of any individual company stock.

The huge (worldwide) stock markets are divided into numerous sectors. At any moment, some sectors are coveted by investors, and lively buying causes increasing stock prices. At the same time, out-of-favor sectors experience heavy selling, and stock prices trend lower. These preferences are not fixed, but change over time, causing Sector Rotation to occur.

For an example of shifting preferences and sector rotation, Technology is one of the best and most dramatic examples. Investors have experienced several decades of love/hate relationships with Technology. In the 1990s, the newly available Internet created demand for Technology stocks. The NASDAQ Composite Index (where many Tech Companies’ stocks are listed) rose from the low 400 range to 5,048 in March of 2000.

When the “Dot-Com Bubble” burst in March of 2000, rotation out of Technology began. By September of 2002, the NASDAQ Index fell to under 1,150. An unbelievable 15 years later (2017), the NASDAQ Index reached a new high closing value, and the popularity of Technology soared. For a while, anyway.

Bonds exhibit another classic example. Following a solid performance in 2020 (+7.5% Aggregate Bond Index change), performance for the next 2 years was negative, -1.5% and -13.0%, respectively. Many investors and advisors dramatically reduced their portfolios’ bond component, rotating into other, more popular, sectors of the market, including Money Market Funds.

In recent years, Money Market mutual funds have become popular due to rising interest rates. Low risk with relatively high returns can’t last forever, and sure enough, rates have begun to fall. Money Market investors are rotating out, again finding favor in the Bond Sector.

Today’s portfolios are experiencing Sector Rotation, as Technology, Money Markets, and other sectors are losing favor, while Industrials, Materials, and International Stocks are among those gathering interest. Multitudes of buyers are causing rising stock prices in these and other preferred sectors.

Watching and understanding national trends enables investors to implement Sector Rotation while maintaining overall portfolio balance and diversification. We can help. Each and every Saturday, we relate the latest news in sector preference shifts during the Van Wie Financial Hour on WBOB radio.

April 15th is approaching quickly, and 2025 income tax reporting documents are being retrieved from mailboxes and websites everywhere. Every taxpayer is responsible for amassing all pertinent documents required to prepare annual Form 1040 (Individual Income Tax Return) on or before that date (or the automatic extension to October 15, available to individuals merely for the asking). Any tax underpayment is absolutely due by April 15.

Whether a taxpayer is using a professional tax preparer or using one of the many D.I.Y. software applications, completeness and accuracy are critical. Understanding what information is needed, and knowing when to expect delivery of necessary forms is critical to avoiding making a premature filing. Filing without complete data can result in a necessary refiling, or even worse, an audit. Rushing to file in order to get a refund is not wise, and may result in unexpected paperwork, fines, and/or interest charges.

Forms W-2 (for employees with paychecks and tax withholding) and 1099 (for self-employed people, contractors, and “gig workers”) should have already been delivered, as the due date was February 2 this year. Corrections requiring new paperwork are rare, but can happen. Delaying a tax filing for that possibility is unimportant, unless the taxpayer is aware of an error on the original form.

Investors will need to await annual statements for their (non-retirement) taxable accounts. Interest and dividends received, as well as short-term and long-term capital gains, will be itemized on an annual Composite 1099 and Year-End Summary. Late February is typical for receipt of these informational forms, though they may be amended later. Rushing to file may wind up requiring an amended filing.

Individuals with IRAs (Individual Retirement Accounts) should receive a Form 5498 if any funds were placed into the IRA. This includes contributions, Rollovers, and “Trustee-to-Trustee Transfers.” The 5498 will arrive in May, and should be kept and preserved, but not filed with the 1040. IRS receives copies of all your required paperwork.

Fewer taxpayers are itemizing tax deductions since the passage of the Tax Cuts and Jobs Act of 2017 (TCJA). That does not provide taxpayers with an excuse to jump the gun by filing before all paperwork is in place. Know what to expect and confirm each document’s veracity before filing.

Most people file electronically, but if you are mailing it in, don’t wait until April 15 and assume the U.S. Postal Service will date-stamp it on time. Add at least one “safety day,” and you will avoid a possible late fee.

Better safe than sorry when dealing with the IRS (and the USPS).

Having introduced the subject of stock market indices (or “indexes”) last week, we are sharing more indices to increase understanding of various markets. We are not talking about “hot stocks.”  Indices are available to track sectors of our economy, as well as other individual countries’ markets. Some cover geographic areas, and yet others represent specific industries.

International markets are my focus today, as recent trends have favored non-U.S. stocks for the first time in a while. Since the world is a large and complex financial amalgamation, how can an individual investor take advantage of shifts in international markets? Actually, opportunities abound.

As investment managers, we engage a wide variety of resources to track market trends accurately and dependably. Individuals can access a wealth of free information through financial websites. We always advise caution when searching the Internet, as many unreliable sources are simply there to sell their pricey services to unwary consumers.

As we addressed last week, following the U.S. Stock Market is perhaps best accomplished using Exchange-Traded Funds, or ETFs. Whether broad or by narrow segments, each index is represented by one or more unique ETFs.

Measuring and representing world economies can be done using individual country market indices. A simple search turns up virtually every country any potential investor wants to consider. Tracking the entire world except the USA is accomplished using (among others) the ETF dubbed IXUS. While the year 2026 is young and cannot reliably be considered a long-term trend, so far IXUS has outperformed our total American stock tracking ETF named SPTM by 340%.

Due to the size and complexity of stock markets throughout the world, we look to actively managed Mutual Funds for our international component of client portfolios. Selecting a favorite fund (which means selecting a favorite fund manager), is key to the process. So long as that manager continues to provide outstanding results, we track the fund’s performance and remain loyal.

Understanding shifting investor preferences helps anyone “tweak” portfolio asset allocations to accommodate trends. As the old saying goes, “The trend is your friend.”

You, as investors, are free to “play the home game,” but many studies have shown that employing competent, credentialed, and experienced professionals increases long-term results considerably. Don’t fall for the misnomer “fee-based” advisor. Look for a fee-only fiduciary advisor. Strivus Wealth Partners can help you.

“The stock market was down today,” proclaimed the 6:00 news on Friday, “as the DOW lost 285 points.” Never has this style of reporting been thorough, but in past decades far fewer Americans were active in the market. Retirement Plans morphed from our parents’ pensions, when no one cared about the internal investments, to our 401(k) Plans and IRAs, where account values are of paramount interest and importance.

“The stock market” is astronomically larger and more complex than the DOW (Dow-Jones Industrial Average, or DJIA), which is calculated using market prices of only 30 mega-companies in the USA. Complete market results are indicated by numerous Indices (or “Indexes”) for several segments of publicly traded stocks, both in the USA and throughout the world.

Knowledge of a few indices can lead to a better understanding of the complex market, and hopefully improved investment results. We’ll explain with a few examples, starting with the broad US stock market. One index for the total market is the Wilshire 5000, which is actually just a name. The index once contained over 7,500 stocks, but today has only about 3,400. This consolidation reflects recent mergers and acquisitions, as well as privatization of formerly publicly traded companies.

Perhaps the next best-known Market Index is the NASDAQ Composite, though relatively few Americans understand what it represents. “The NASDAQ” is currently comprised of about 3,320 mostly smaller companies, with a bias in favor of technology. Most Americans view NASDAQ through the lens of the largest 100 included companies, represented by the symbol QQQ.

Several indices track small companies, and a few track the smallest publicly traded American companies. Other tracking indices cover medium sized companies, specialty companies, and various segments of the market. No one should feel compelled to follow all of them, but understanding trends in various indices can improve your investing skills.

For several years, certain market segments have been outperforming others, as well as the broad market itself. Huge technology-based companies were the rage. Their performance enhanced many portfolios. Lately, that trend seems to have been reversed. Smaller (and even “Micro-Cap”) companies have been outperforming the kingpins of the recent past.

Many market watchers, professional and otherwise, are reacting to the trend. Anyone with a working knowledge of various market indices can readjust their asset allocations to ride the current wave. As always, large abrupt modifications to your asset allocation should be avoided. More discussions regarding indices will be presented in coming weeks.

Ask a number of people how they feel about declining interest rates, and you will receive a wide variety of answers. Net Borrowers (those who are repaying higher loan obligations than they currently have cash saved) will generally be elated at the prospect of declining rates. Conversely, Net Savers (those whose savings exceed their loan obligations) will generally view declining rates as a negative. Others are on the fence, with no preference.

Finding myself in the Net Saver group, I am sorry to see interest rates declining. Not long ago, we were able to receive 4.5% annual interest on High-Yield Savings Accounts. Today, rates are closer to 3.3%, a reduction of 26.7% on our monthly interest income. Since these accounts carry extremely low risk, the 4.5% rate felt like a windfall.

Interest rates are set by the market, but influenced by the Federal Reserve (FED) as they react to inflation, raising or lowering short-term interest rates, based on current economic conditions. Inflation is generally slowing down, and the FED is reacting by lowering short-term rates. Longer term rates have been following suit, with mortgage rates and bond rates declining.

A quick look at 21st Century interest rates will demonstrate how significant rate changes have been over time. The current Century came in like a lion, with average interest rates of 6.24%. By the end of the first decade, that rate had plummeted, standing at 0.1% in 2011. Rates stayed near zero until 2023, topping 2% during only 1 year, in 2019. Ensuing years saw rates over 5%, but those are currently dropping under 4%.

Higher returns are generally realized by investors willing to increase their portfolio risk. Older investors, many of whom are Net Savers, show little enthusiasm for increasing portfolio risk. Unfortunately, the tradeoff is a must for those trying to maintain or increase investment income.

Good news is available to investors willing to accept marginally higher risk. Bond prices rise inversely to interest rate changes, and are now gaining value, increasing total returns for investors. Several forms of quality Bond Funds are available to investors, and some are producing results over 4.5%.

Both Mutual Funds and Exchange-Traded Funds (ETFs) can be purchased with no transaction fees, and some of our favorites pay monthly dividends. Look for high quality investments with long track records. While these funds do require acceptance of more risk, they are designed to produce income for investors. Check with your financial advisor if you need guidance.

We understand that falling rates are making Net Borrowers happy, and we can be happy for them. However, as to Net Savers, it was fun while it lasted. Interest rate changes affect everyone.

Now that we’ve all had a breather over the Holidays and are returning to our homes, schools, and jobs (local traffic proves my observation), it is not time to mentally disconnect from planning our 2026 finances. Aside from beginning to organize necessary paperwork for preparation of last year’s 2025 Individual Income Tax Returns, we also need to prepare for changes affecting new 2026 financial rules and opportunities.

Increased contribution limits for Retirement Accounts, additional Itemized Deduction opportunities, and escalating costs of health insurance premiums are just a few items requiring our attention if we expect to minimize our tax burdens for 2026. It is never too soon to begin making changes.

For taxpayers ages 65 and up, there is a new tax deduction of $6,000 per individual. While it is independent of filing status, it does phase out at higher income levels. Plan carefully to preserve this deduction if possible.

Fundamentally important to many American jobholders and self-employed workers is their preparation for retirement income. Maximizing retirement account contributions is a giant step toward optimizing retirement income. When the U.S. Tax Code increases allowable annual limits, taxpayers should act immediately to adjust their voluntary contributions.

Also, more of your dollars, contributed earlier in the year, and appropriately invested, lead to higher retirement income. In 2026, annual IRA contribution limits rose to $7,500 from $7,000. Eligible IRA account owners ages 50 or higher may now contribute a total of $1,100 in “Catch-up Contributions. 401(k) participants received an increased contribution limit of $1,000, to $24,500, as well as a $500 bump to “Catch-up Contribution” limits.

Personal income tax rates were frozen at relatively low 2025 limits, but for 2026, tax brackets were expanded for inflation. This means more dollars will be taxed in each bracket before shifting up to the next marginal tax rate. Also, tax withholding tables have been revised to reflect new rates and bracket sizes. This will result in larger net paychecks as withholding is reduced.

2026 also ushers in a new tax saving opportunity for charitably minded taxpayers. Each individual is allowed to donate up to $1,000 from non-retirement accounts to Qualified Charities. These gifts will be subtracted from Gross Income. This direct tax saving feature is called an above-the-line deduction. These deductions do not require itemizing on your tax return.

Due to these several tax cuts, many taxpayers are receiving the ability to increase contributions to Retirement Accounts. This creates a win/win situation for those savvy enough to make adjustments. Knowing the rules and taking action will benefit your retirement income.

America’s housing market is not broken, but it does need some help. Supplies of available homes are increasing, but remain historically low, and the FED is lowering interest rates at a snail’s pace. Potential first-time home buyers are waiting on the sidelines, not yet qualified, hoping for relief.

Concerned Trump Administration officials are brainstorming for solutions. Presidential housing advisor Bill Pulte convinced the President to consider authorizing 50-year mortgages. Immediately, media “experts” in every aspect of real estate, finance, and plain-old politics reacted, apparently with hair on fire. I strongly disagree with the naysayers, and here’s why.

Mortgage lenders are tightly constrained by government regulations. They must adhere to the playbook, or risk losing their livelihoods. Creativity has no standing in this hyper-controlled market. No Lone Wolves need apply. Potential buyers are excluded from becoming mortgage-holding homeowners if their income is not 100% up to federal standards. No exceptions.

For the market to improve, something must change, and the 50-year mortgage deserves its day in court. Why so many “experts” have been so quick to declare this concept blasphemy is their dearth of creativity. If $200 in monthly payment reductions would facilitate a first-time home buyer, and if the 50-year mortgage would produce that payment, do the deal!

Someone please tell me where it is written that in the event a 50-year mortgage become available to those who may choose it, everyone in the country must use one. That appears to be the implication espoused by many of today’s “talking heads.” America is about choices, and most intelligent people would prefer to keep it that way. The 50-year fixed mortgage option would constitute an added choice; one that could make the difference to some potential buyers.

Entirely too many potential first-time buyers are being excluded from both the American Dream of ownership, as well as the equity buildup afforded to homeowners. We should let them stop paying rent and buy their first homes.

Professional whiners point out that 50-year mortgage holders will pay much more for their residence over the payment period. National statistics have revealed for decades that most mortgages are either paid off or refinanced within 7 to 10 years. What’s all the fuss? Get people involved in American equity. If that requires some creativity, so be it.

No equity buildup can be realized while renting, though some “rent-to-buy” arrangements do exist, but those are scarce. Equity buildup is generally much faster than mortgage principal paydown. It is the watch, rather than the wallet, that creates wealth. Let young Americans get started.

Every 2 years I review my past Congressional Financial Wish List, both to see what happened since last time, as well as to see what could be improved. Starting with my 2023 list, I’ll update 2025 highlights. 2023 originals are summarized in plain text, and new 2025 comments are in italics.

 

  • 2023 original: Wish #1. The Federal Reserve (FED) should pause rate hikes. Excessive government spending, consequent inflation, and FED interest rate hikes crippled our economy. 2025 update: Fast forward, and the FED has slowly reduced So slowly that most Americans, along with the President, would prefer faster cuts. Grade = “B”
  • 2023 original: Wish #2. Get a grip on spending in Ukraine. American dollars are being ripped off in Ukraine, and weapons are falling into the wrong hands. Restraint is needed, and oversight is a must. 2025 update: With the new Administration, the financial drain has abated, but progress toward settlement is painfully slow and uncertain. Grade “B“
  • 2023 original: Wish #3. Build that wall. We need to finish what we started under Trump 45. Instead, we sell existing wall sections for pennies on the dollar. 2025 update: Trump has resumed construction, and the Wall is part of the greatest cessation of illegal immigration ever witnessed. Grade “A”
  • 2023 original: Wish #4. Return to a Constitutional budgeting process to slow spending growth. We are on track for another $2 Trillion (12 zeros) deficit in FY 2023, 100% of which gets added to the National Debt. 2025 update: House Speaker Mike Johnson has implemented the new (old?) budgeting system, but the liberal Democrats’ resistance movement has left the process not even half done. Grade “C+”
  • 2023 original: Wish #5. Address the Social Security and Medicare impending insolvencies. The clock is ticking on Social Programs, and too many Americans depend on the programs’ continuation. 2025 update: No change. Grade “F”

 

Updating the List for 2025/26 is not a pleasant task. But one area stands alone in deserving praise. Taxes. For those of us who firmly believe in lower taxes and reduced regulation, 2025 was a barn burner. With the 2017 “Trump Tax Cuts” now made permanent (they were slated to expire on 1/1/2026), America was changed in a manner, and to a degree, that many Americans under-appreciate. Grade “A+” on taxes.

As New Year’s Day, 2026, approaches, the IRS is presenting a range of new opportunities for taxpayers, savers, and investors. Congress has passed several provisions that take effect with the New Year. Increased deposits to Retirement Accounts, codification of today’s relatively low Tax Rates, and now increasingly flexible opportunities for charitable giving, all will positively guide generous taxpayers looking to increase savings and reduce taxes.

Throughout the year, we discuss opportunities for tax savings tied to Charitable Gifting. For decades, Americans have been able to itemize tax deductions for gifts to qualified charities. While the ability to do so has remained constant, Tax Code changes have dramatically reduced the percentage of Americans who itemize deductions on their annual Form 1040.

Perhaps the most innovative tax provision for some people is the Qualified Charitable Donation (QCD), which allows donors ages 70-1/2 and up to direct contributions from their IRA Retirement Accounts directly to the charity. This method requires only a notation on a tax form, and applies to the IRA owner’s Required Minimum Distribution (RMD) where applicable.

Beginning January 1, 2026, annual Qualified Charitable Contributions up to $1,000 per individual ($2,000 for Married Filing Jointly) may be used to reduce total income up to those limits. Essentially an “above-the-line” deduction, it allows taxpayers to choose the Standard Deduction and still receive tax benefits from their contributions. There is no age limit. This provision is similar in effect to the QCD explained above.

Charitable Gifts are deductible in the year the funds actually change hands. For many taxpayers, this means that gifts get aggregated around the Holidays. Many generous taxpayers desire a greater degree of control over the timing of gifts. One common example is found among people who give to their church and prefer to use monthly payments, rather than a year-end lump sum.

Control of gift timing can be enhanced using Donor-Advised Funds, or DAFs. Gifts applied to a DAF are permanent and deductible by the giver in the year of the donation. The donor has the right to “suggest” to the DAF preferred charities for DAF’s donations. While not mandatory, in practice, most DAFs will honor the donors’ suggestions. Perhaps the best news is that a full tax deduction is granted in the year the deposit is made, but individual gifts from the fund can be spread throughout subsequent tax years.

Innovative lawmakers are allowing taxpayers more flexibility, and hopefully increasing their propensity to make charitable contributions. Next week, we may take this flexibility to a new level, assuming the Bill gets introduced into Congress and eventually passed.