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Writer's pictureDoug MacGray
2 days ago6 min read

New Year of Unknowns and Focus on Prosperity

January 5, 2025



U.S. MANUFACTURING SLOWS MORE SLOWLY: The Institute for Supply Management (ISM) keeps a monthly index called the Purchasing Managers' Index (PMI). If the index score is above 50, it means the manufacturing sector is growing. Below 50 means contraction. For the ninth month in a row, the PMI came in under 50 meaning the PMI is indicating 9 straight months of U.S. manufacturing contraction. But, the December PMI score increased from 48.4 in November to 49.3. This was a bigger jump than had been generally expected, and the highest score since March 2024.


OUT WITH THE OLD, IN WITH THE NEW: Last week was a holiday-shortened week that marked the end of 2024 and the beginning of 2025. For the week, stocks ended lower, but for the year, U.S. stocks are up thanks to a Friday rally driven by our old friends, large technology stocks. The S&P 500 ended the week negative, the third time that has happened in the last four weeks. The good news from the manufacturing sector (see above) was a typical double-edged sword. Manufacturing activity seems to be moving in the right direction, which is good for the economy, but good economic news always worries those who want the Fed to keep lowering rates.



LONGER-TERM PERFORMANCE: Below are the annualized three-year and five-year numbers for these same indices.



NEW UNEMPLOYMENT CLAIMS: The number of weekly initial unemployment claims has been hovering in the same general territory for the past few years. Last week, the figure was 211,000, a decrease in 9,000 from the prior week. The four week moving average is now 223,250.



U.S. AUTO SALES: In December, sales of light vehicles were up 1.8% from November and up 5.5% from December of 2023.



HOW IS YOUR COMMUTE?: A recent study revealed average commute times for cities all across the U.S. Of the top ten cities for longest average commutes, it is not a surprise that six of them are in California (Palmdale, Moreno Valley, Corona, Fontana, Lancaster, and Stockton). New York came in second and Jersey City, NJ third followed by Yonkers, NY. Rounding out the top ten was Chicago which came in seventh. The range from longest average to tenth longest was 45.5 minutes to 32.7 minutes.


SPANISH INFLATION: Inflation rose in Spain for the fourth straight month in December. December's twelve-month inflation number came in at 2.8%, up from 2.4% in November. The cost of energy was the key driver of inflation in December as Spain, and all of Europe, head into the cold months of the year. Over the course of 2024, the European Central Bank lowered its key interest rate from 4% to 3%.


THE NUCLEAR DEALS KEEP COMING: The U.S. government just awarded a $1 billion contract to Constellation Energy to supply nuclear power to the U.S. government over the next decade. Constellation is the largest nuclear energy provider in the U.S. It will provide electricity to more than 13 federal agencies as part of the agreement with the U.S. General Services Administration.


INVESTING MISTAKES: All of the following stock trades had the same investor attached to it.

The investor owned 415 million shares of U.K. based grocer Tesco in 2012. The investor sold some stock and made a $43 million profit, but held onto most holdings of Tesco. In 2014, Tesco got caught overstating its earnings, and its stock price crashed, and the investor lost $444 million.


In 1993, this investor spent $433 million purchasing Dexter Shoe Company. Because of the manner in which the investor raised the cash for the deal, the investor ultimately lost about $3.5 billion.


In the 1970s, this investor decided to not pull the trigger on investing $35 million to buy the Dallas-Fort Worth NBC station which ultimately reached a value of $800 million.

This same investor bought $7 billion of Conoco Phillips stock and then watched the value plunge to $4.4 billion


Of course, this investor is Warren Buffett/Bershire Hathaway. Like all investors, including Stonecrop, he is fallible. Unlike most investors, his investments are massive, between $100 million and $220 billion today. In 2024, he lowered his Apple investment from $175 billion to $70 billion. He lowered his Bank of America investment from $34.8 billion to $31.7 billion. He lowered his Chevron holdings from $19 billion to $17.5 billion. He will tell you that he is not predicting crashes when he accumulates cash, but waiting for substantial value opportunities, two of which I pointed out last week. Does he think the Magnificent Seven stock are overpriced? Probably. But since 1999, Berkshire Hathaway's average cash position has been 49.32%. In November it was just above 55%. He has made some purchases since then. In 2002, during the Tech Bubble, his cash position reached 70% and just before the 2008 crisis, his cash was at about 66%. He sticks to his circle of competence. No matter how good the opportunity, if he does not understand it, he won't buy it. He is clearly leveraging treasuries at over 4%, generating significant returns for the time being at little risk. He is being patient.


DOWNSIZING AND DECLUTTERING VIDEO: My lovely client and friend Rita Wilkins has become an expert in downsizing and decluttering. She recently recorded a very simple video on what she has learned on her personal downsizing and decluttering journey where she shares with some vulnerability the lessons she has learned along the way. It has garnered over 800,000 views despite its lack of music and pizzazz, You can find it here.


MAY YOU PROSPER IN 2025: The following are select passages from a recent article written by John Coleman, author of The Harvard Business Review Guide to Crafting Your Purpose (emphasis added by me):


If you read Bronnie Ware’s brilliant “The Top Five Regrets of the Dying,” the Harvard Grant study, the pioneering work of Daniel Kahneman and Angus Deaton on happiness and income, or the teachings of nearly every ancient religion or philosophy, you’ll discover that very few people, at the end of their lives, care about money, fame, or power as much as they think they will. And almost everyone regrets a deficit of meaningful relationships or a lack of meaning in their work and life. A proper view of success is targeted toward human flourishing — what the Greeks referred to as eudaimonia — which proposes a richer definition of a successful life that may be prosperous but is also purposeful.

*****

Success without significance — which I define as purpose, service, and meaningful relationships — is not really success at all.

*****

Instead, it’s important to properly reflect on how you can live a life imbued intensely not just with the superficial trappings of “success” but with deep purpose and joy in all we do. As psychologist Martin Selligman has framed it, true flourishing involves some element of accomplishment, certainly, but also involves meaning, positive emotions, engagement, and relationships. Reflecting on this more profound definition of success challenges us to adopt a fundamentally different path than the one championed in popular culture. And doing it early — and often — allows us to craft a life that is more consistently filled with meaning.

*****

[A] flourishing life is full of purpose — including meaningful love (positive relationships), avocations, beauty, occupation (good work), religious or philosophical beliefs, and service to others. The best time to conduct these reflections is often in the midst of a life transition, like graduation; considering a new job; a big life change like marriage, kids, or divorce; or (yes) retirement from one’s primary profession.


At Stonecrop, we purposely use the word "prosperous" in our purpose statement because it is so rich with meaning, as this author so eloquently explains. A prosperous life does not automatically occur because your net worth is increasing on schedule. There is so much more, and I wish, hope, and pray that all of you experience prosperity in 2025.

BIRTHDAY CELEBRATIONS: My granddaughter Josefine celebrated her first birthday, and grandson Silas celebrated three years! Wonderful times.



Have a great week!


Our purpose is to honor God by helping our clients see the objective, find the path, and navigate past the obstacles to a more prosperous future.



Douglas R. MacGray, J.D., C.F.P. ®

President

Stonecrop Wealth Advisors, LLC

Direct | Cell | Fax

(610) 628 4545



"Failure is a reality; we all fail at times, and it's painful when we do. But it's better to fail while striving for something wonderful, challenging, adventurous, and uncertain than to say, 'I don't want to try because I may not succeed completely.'" Jimmy Carter


"Let your eyes look straight ahead, fix your gaze directly before you. Make level paths for your feet and take only ways that are firm." Proverbs 4:25-26 (NIV)


SOURCES:

INVESTING MISTAKES: https://everythingmoney.com/blog/is-warren-buffett-timing-the-market-let-s-break-it-down-53 AND https://www.cnbc.com/2017/12/15/warren-buffetts-failures-15-investing-mistakes-he-regrets.html

NEW UNEMPLOYMENT CLAIMS: https://www.dol.gov/ui/data.pdf


(c) 2025 Anno Domini, Stonecrop Wealth Advisors, LLC, All Rights Reserved


Investment advisory services offered through Stonecrop Wealth Advisors, LLC, a Registered Investment Advisor with the U.S. Securities and Exchange Commission.


SDG

*S&P 500: This is a measure of the performance of the 500 largest companies in the United States, and it a common index to track the performance of U.S. equity markets, especially the large cap markets.

*MSCI All Country World Index X US: This is a broad measure of the performance of worldwide equity markets excluding the United States.

*Bloomberg U.S. Aggregate: This is a measure of the U.S. bond markets.

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