A New Year’s Message from the LVW Advisors Partners

As we reflect on 2024—a year of innovation, resilience, and growth—we are reminded of the enduring principles that guide successful investing. Many of you have achieved significant milestones this year, and it has been our privilege to partner with you through them. Thank you for your trust and partnership as we navigate this journey together.

Lessons from 2024: The Value of Patience and Perspective
A recent Wall Street Journal article highlighted a trend of young investors engaging in speculative trading, with one man at a Gamblers Anonymous meeting calling options “the crack cocaine” of the stock market after suffering significant losses. While the allure of quick gains is tempting, history reminds us that disciplined, long-term investing remains the most reliable path to success.

As Jesse Livermore noted in Reminiscences of a Stock Operator: “There is nothing new on Wall Street. Whatever happens in the stock market today has happened before and will happen again.” The numbers support this wisdom: while daily market movements are unpredictable (with only a 53% chance of gains on any given day), the odds improve dramatically over longer horizons—75% for one-year periods and nearly 90% over five-year periods. Patience and discipline remain the cornerstones of successful investing.

“The first rule of compounding: Never interrupt it unnecessarily.” – Charlie Munger

Portfolios Benefited from 2024’s Key Themes
This year’s strong market performance was driven by U.S. large-cap stocks, particularly in the technology sector, which benefitted from advancements in artificial intelligence (AI) and strong revenue and earnings growth. Client portfolios—with healthy allocations to U.S. large-cap equities—were well-positioned to take advantage of these trends.

On the fixed-income side, rising long-term interest rates throughout 2024, presented challenges for many bond investors. However, overweight positions in short-term bonds and bond alternatives helped mitigate risks while enhancing returns. Allocations to high-quality short-duration bonds provided stability while taking advantage of attractive yields amidst rising rates.

Regardless of valuation advantages outside of the U.S., it is difficult for us to see these trends reversing in the near term.

Looking Ahead: Opportunities and Uncertainties in 2025
As we turn our attention to 2025, we find ourselves at an intriguing juncture. While Wall Street strategists are optimistic about the year ahead, history reminds us that predictions are worthless. As John Kenneth Galbraith aptly put it, “We have two classes of forecasters: Those who don’t know—and those who don’t know they don’t know.”

Rather than relying on predictions, we focus on probabilities and what we can control. Year three of bull markets are typically marked by higher volatility and lower returns. Key factors such as interest rates, inflation trends, and the strength of the U.S. dollar will play critical roles in shaping market performance. If markets experience volatility or even a down year in 2025, history suggests these moments often present opportunities for better returns in the future.

Tax-Friendly Strategies
One area we emphasized this year was deploying tax-friendly strategies to maximize real returns—returns after accounting for both taxes and inflation. By focusing on generating tax alpha through strategies like tax-loss harvesting, asset location optimization, and managing distributions, we help ensure clients keep more of their investment gains. These strategies are not just about saving on taxes—they are about maximizing what you keep, which ultimately drives real financial progress over time.

We will continue managing risk in client portfolios through active rebalancing while holding investments that diversify returns beyond U.S. stocks. No matter what 2025 brings, our disciplined approach will ensure your portfolio remains resilient and aligned with your long-term goals.

US Exceptionalism and Technology Leadership
One defining theme of 2024 has been the continued dominance of large U.S. technology companies and the broader strength of American innovation. The United States remains at the forefront of advancements in AI, cloud computing, and semiconductor development—industries driving economic growth and reshaping global markets.

This exceptionalism is reflected in both corporate earnings and market leadership, with U.S.-based companies continuing to outpace their global peers across multiple sectors. As these trends continue, our focus remains on ensuring your portfolio captures opportunities created by America’s leadership in innovation.

The AI Boom: A Transformative Opportunity
The ongoing AI boom continues to transform industries from healthcare to manufacturing, creating significant opportunities for growth across sectors. Consider this: ChatGPT launched just over two years ago, and Nvidia’s latest Blackwell chip is more than twice as fast as its predecessor from 24 months ago. Even assuming Moore’s Law slows down to a double every four years from here, processing power by 2044 could be exponentially more powerful than today’s technology.

What tech companies (present and future) do with that incremental processing power is unknowable—but it is fair to say it will be revolutionary.

Navigating Policy Changes and Economic Shifts
The political landscape adds complexity as we enter 2025 under a new administration. While short-term political developments may create uncertainty around policies affecting taxes or regulation, it’s important not to let them dictate long-term financial decisions.

Expectations regarding economic conditions and Federal Reserve policy have been shifting rapidly over recent months—much like Mark Twain’s observation: “If you don’t like the weather in New England, just wait a few minutes.” Inflation concerns have reemerged after earlier optimism about rate cuts, highlighting the need for flexibility in navigating evolving conditions.

While short-term narratives may dominate headlines, our focus remains on maintaining strategies designed to withstand volatility and capitalize on long-term opportunities.

We are proud to share LVW Advisors is now over 20 people strong, advising on assets exceeding $2.3 billion—a reflection not only of your trust but also our commitment as fiduciaries dedicated to helping you achieve your financial aspirations with integrity and care.

At LVW, we are also using artificial intelligence (AI) to enhance services including:

• Custom Index-Based Portfolios for Tax Alpha: Advanced portfolio management software helps optimize investments for tax efficiency, so clients keep more gains after taxes;
• Interactive Financial Planning Tools: AI-driven tools analyze big data to provide deeper insights into client scenarios; and
• AI-Enhanced Document Analysis: Actively evaluating cutting-edge software which scans complex documents like tax returns or estate plans within seconds—providing summaries with actionable recommendations.

By integrating these tools into our practice, we deliver more precise advice while improving outcomes for you. As technology evolves, we remain committed to adopting innovations that align with our mission of exceptional service.

Finally, we want to extend our heartfelt thanks to those who have referred or recommended us this past year—it is truly one of the greatest compliments we can receive.

Investing is a journey that rewards patience, discipline, and optimism. Together we’ll continue building toward a brighter financial future.

Here’s to a prosperous new year filled with health, happiness, and success! Onward to 2025!

Best Wishes,
Lori, Joe, and Jeff

Lori Van Dusen, Founder & CEO
Joseph Zappia, Co-Chief Investment Officer, Principal
Jeff Wagner, Senior Partner, Principal