January was “interesting”! Here is a recap:
Monday, January 20th: Donald J. Trump’s Presidential Inauguration
Tuesday, January 21st: “Stargate”, a private sector AI investment of $500 billion is announced in the United States. The project is reported to create an estimated 100,000 jobs.
Monday, January 27th: NVIDIA, the largest U.S. company by market capitalization and a leader in the manufacturing of semiconductors needed for AI, sheds $600 billion in market capitalization. It is the largest one-day market cap loss in United States history.
The S&P 500 gained 2.70% in January after a 2.50% loss in December 2024 and a 5.73% gain in November.
As you can see, there have been many events in the last few months including a heated election, inauguration, investment announcements, leadership change, policy change and finally a shakeup in a major sector, Artificial Intelligence, that many estimate could change how we work and live.
On Monday, we typically see a heavier call volume as clients have had all weekend to ponder. However, I will remember Monday, January 27th for a very long time. My typical routine is to pour a cup of coffee and begin to digest the news from a few sources that I read every day. That particular morning, the big news was that NVDA was opening down a double digit percentage. Typically, when a market leader in an industry goes down significantly, the entire sector goes down and that is exactly what happened. In this case, the loss was so large that it brought the entire market down.
The reasoning behind the massive decline was “Deep Seek”. According to CNBC, “The sell-off was sparked by concerns that Chinese artificial intelligence lab DeepSeek is presenting increased competition in the global AI battle. In late December, DeepSeek unveiled a free, open-source large language model that it said took only two months and less than $6 million to build, using reduced-capability chips from Nvidia called H800s.” CNBC.com January 27th, 2025.
Essentially, a Chinese owned and/or backed AI company released a version of AI for “free” that costs a fraction of the investment that the U.S. announced just the week before and it only took a couple of months to create. Whether this is completely or even partially true is a question. Regardless, it shook the foundation of the AI sector and is a concern for U.S. investors.
Unfortunately, as a licensed financial advisor through FINRA, I cannot give advice publicly as every investor is different and has different needs and circumstances. However, if you are invested in the AI sector and would like to discuss your situation and how this historic news may affect your investments, I encourage you to call our office to set up a complimentary review of your holdings. 731-285-0097.
Preparing For The Storm: I recently read an article that was gloom and doom. The article gave several reasons as to why they believed we are on the cusp of a major downturn in the market. While I am always on edge and looking for a correction, the question is always, "What was the catalyst?" In my twenty-seven years in this industry, I have seen corrections that were artificially created and short lived, and I have seen real corrections that were systemic and lasted for months if not years. The catalyst has always been what I have focused on when considering the severity of the correction. In this case, the opinions that the author shared may come to light, I do not know as no one truly does. Gloom and Doom stories and statements of euphoria are released almost simultaneously on a daily basis. But he did say one thing towards the end of the article that I really liked and preach on an ongoing basis, “Prepare, don’t predict.”
I have been through many storms AND corrections in my life. And both are similar in the fact that they are not fun, they are unpredictable and they are always going to happen at some point. With both, I have learned that preparing for the worst and praying for the best is a much better strategy than trying to predict if something is going to happen and being wrong.
One of the best ways to prepare for a storm is to know the severity of it. We can make informed decisions if we know the potential for damage and probability. In my office, we have a program that allows us to enter a client’s investments. The report that is generated shows the “what if you held” during the most recent economic storms including Y2K (2000), 9/11 (2001), Banking crisis (2007-2009) and Covid 19 (2020). The report is to help you prepare and brings a reality as to how much risk you are taking and what could happen in another storm. If you would like to get a copy of this report, please bring a copy of any investment statements that you would like for us to analyze to our office. Kim or Charity will set up a follow-up appointment at your convenience.
Probate?
Last month, I wrote about an experience I had with a beneficiary of an estate and how a true estate plan could have saved her thousands of dollars and countless hours of time.
In many of the discussions that I had with people that inquired about the blog, the question of “what is probate?" came up.
Probate is simply the distribution and settling of a deceased estate. There is a common misconception that if you have a will, you avoid probate. This is not true. Even the will has to be probated. But with a will, the deceased is giving the executor or executrix instructions on how to distribute assets. Without a will, the state that you live in has laws that will dictate the distribution of assets which may or may not be how the deceased would have wanted them.
Probate is part of the process. However, in my previous blog, I gave several examples of assets that could have avoided probate through proper beneficiary designations, ownership changes and use of “payable on death”. Using these avoids probate and by-passes the will. All of these are very simple to use and could have made things inexpensive and simple for the daughter in this case.
If you need an estate plan check up or you would like a copy of my “Preparing Your Estate Plan” white paper, please contact the office.
Lastly, all the subjects that I have mentioned in this blog require planning. My job is to help you by analyzing, creating, implementing and monitoring your plan. If you would like our help in getting started, please call the office for an initial consultation.
Until next time….
Cheers!
*The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.