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  • John M West III, MBA, CFP®


Equity markets had a strong first quarter, with the S&P 500 reaching fresh highs. Bonds have lagged as anticipation of Fed rate cuts has tempered; however, it is still likely that we will get cuts later this year and subsequent price appreciation. In the meantime, we are still getting very good yields on bonds. Equity growth continues to broaden from just large-cap stocks to now small-cap, mid-cap, and foreign stocks, all performing well over the past year.

As a reminder, the index returns above should only be used as a very broad point of reference.

Cash & Fixed Income: High-yield bonds led for the quarter and the past 1, 5, 10, and 15 years, while cash led for the past 3 years. Aggregate bonds were the laggard for the quarter, 1, 3, and 5 years, while cash was the worst performer for the past 10 and 15 years.

Bond yields remain in the 5% - 7% range while money market is still paying over 5% annualized. Money market yields will go down when the Fed ultimately begins to cut interest rates, but we will continue to take advantage while it lasts. Strong bond yields also continue to support a more sustainable environment that provides diversification from stocks.

EquitiesLarge U.S. stocks outperformed all equity categories for all periods. Small-cap was the worst performer for the quarter and 3 years, while foreign stocks were the laggard for the past 1, 5, 10, and 15 years. As a whole, equities have had a very strong 12 months.

With the first quarter in the books, the economic data remains strong even with interest rates leaning towards a “higher-for-longer” period. We continue to have strong yields in bonds and cash, and large-cap equities are at or near all-time highs. We feel that the equity returns will broaden out into other stock categories. This supports a healthier environment where a diversified portfolio will provide the best risk-adjusted returns to achieve your long-term retirement goals.

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