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AJA Weekly Recap

2025 | January 6

John,

Here is your weekly market commentary. We hope you enjoy receiving our newsletters. If you have any questions about the following content, please let us know!

- The AJA Team

This Week….

  • The Markets
  • Saving Early
  • Cold New Year's Tradition

The Weekly Focus


Think About It

 “Write it on your heart that every day is the best day in the year.”

 

  — Ralph Waldo Emerson, philosopher

The Markets

Stocks Decline


A modest rally on Friday for the major U.S. stock indexes wasn’t enough to offset small daily declines earlier in the week amid the transition to a new year. The S&P 500, the NASDAQ, and the Dow each posted a weekly decline of around 0.5%.


Fresh concerns about global oil supplies sent the price of U.S. crude up more than 4% for the week to around $74 per barrel on Friday afternoon. While that was the highest price since mid-October, it was roughly unchanged from the level at the start of 2024. 


As major U.S. banks prepare to open quarterly earnings season in mid-January, analysts expect that fourth-quarter earnings per share for all companies in the S&P 500 rose by an average of 11.9%, according to FactSet. Such an outcome would mark the highest year-over-year earnings growth rate since the fourth quarter of 2021.


Historically, January’s stock market performance has been a strong indicator of what may be in store for the rest of the year. In fact, about 71% of the time since 1929, the S&P 500 has posted a positive return for the year after gaining ground in January or has gone on to post an annual loss when the market has declined in the first month, according to S&P Dow Jones Indices.


A monthly labor market report due out on Friday will show whether a recently uneven trend in U.S. jobs growth extended into December. In November, the economy generated 227,000 new jobs—far above October’s weak result of 36,000 jobs but slightly below September’s 255,000 figure.


Source: John Hancock Investment Management

Saving Early

The start of the year is the perfect time to prioritize both personal and financial well-being. While physical health often takes center stage in New Year’s resolutions, financial fitness deserves equal attention. This is especially true after two years of strong market returns and changing economic conditions.


Just as you might plan your fitness goals, revisiting your financial roadmap can help guide you through the coming year. This could include reviewing your financial situation, setting realistic savings targets, and ensuring you have an appropriate investment plan.


So, whether your goals involve advancing your investment plan, building an emergency fund, reducing debt, or growing your retirement nest egg, breaking these objectives into manageable actions can make them less daunting and more achievable.


There is an often-quoted proverb that states “the best time to plant a tree was 20 years ago. The second-best time is now.” This is because time in the market is one of the most powerful wealth-building tools, thanks to the power of compound returns. When investment returns are reinvested, they can generate their own returns, creating a compounding effect that turns savings into real wealth over decades.


For example, the accompanying chart shows how waiting even a few years can have a large impact. For an investor who experiences 7% average returns, beginning to invest when they are 35 rather than 30 means their original $1,000 investment grows to $7,612 instead of $10,677 when they retire. The same pattern is true whether those average returns are 3%, 5%, or 10%. Over the course of an investment lifetime, these differences add up and can become significant. Even small contributions can grow substantially over decades through the compounding process.


What prevents some from investing is the fear of market swings, especially with markets near all-time highs. However, the reason those who can stay invested are rewarded in the long run is exactly because it is difficult to do so. When investors exit the market due to short-term concerns, they create opportunities for disciplined investors to buy at even more attractive prices, setting the stage for higher future returns. This is why keeping a level head, and investing over long periods of time, are the best ways to achieve financial goals.

A Brrr-y Cold New Year's Tradition

People around the world like to welcome the new year by putting on a bathing or wet suit and immersing themselves in cold water. The name of the event – Polar Bear Plunge, Christmas Swim, or New Year’s Dive – varies by location. Of course, water and air temperature vary greatly, too, depending on where the plunge takes place. Here are a few examples from the United States on January 1, 2025.


Coney Island, New York/Atlantic Ocean

Air temperature:           50.0 degrees Fahrenheit

Water temperature:      40.5 degrees Fahrenheit


Myrtle Beach, South Carolina/Atlantic Ocean

Air temperature:           60.0 degrees Fahrenheit

Water temperature:      58.4 degrees Fahrenheit


Milwaukee, Wisconsin/Lake Michigan

Air temperature:           30.0 degrees Fahrenheit

Water temperature:      39.7 degrees Fahrenheit


San Diego, California/Pacific Ocean

Air temperature:           60.0 degrees Fahrenheit

Water temperature:      57.1 degrees Fahrenheit


According to Cleveland Clinic Health Essentials, submerging yourself in cold water for short periods may have health benefits. For people who are in good health, cold-water baths may ease sore muscles, reduce inflammation, improve circulation, and promote better sleep. (It remains unclear whether New Year’s Day plunges confer any of these benefits.)


How did you celebrate the start of the new year?

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Andrew Quinn, CFP®
Partner

Emily Triano

Operations Manager


emily@ajadvice.com

Maya Laws

Operations Associate


maya@ajadvice.com

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