Market Correction or Bear Market?

August 5, 2024

There is no gentle way to express it. The markets look quite ugly right now and it naturally begs the question: is it time to worry? Our answer today is No.

These are normal corrections within a rising market. Now, this obviously will cause concern that a correction may turn into a bear market. We will continue to evaluate the market and economic measures to best position our portfolios going forward.

Corrections are very normal and very necessary for our markets. Remember, the markets were at historic, all-time highs just months ago. Unfortunately, they do not go straight up. As mentioned in past comments, the markets will move two steps forward and one step back and sometimes four steps forward and two steps back. The current long-term market trend remains intact.

A market correction is defined as a drop in value between 10% & 20% and a bear market is greater than 20%.

This is how far the major indexes are from their recent highs:

  • The Nasdaq Composite is up by 13.7%.
  • The S&P 500 is down 8.7%.
  • The Dow Jones Industrial Average is up by 6.3%.

Notable Market Events Over the Years

Keep in mind that with all these market events, we are still coming off historic market highs just this year!

2022: Worst year since 2008 Financial Crisis: S&P 500 down almost 20%, Nasdaq down over 32%

2020: Coronavirus Crash: Dow lost 37% between February and March but eventually recovered to post a positive year.

2018: Worst year for market to that point since 2008

2016: Worst start to year in history but rebounded with a gain

2015: Markets lost all their gains for the year in August (-11%) and finished the year generally flat.

2010: “Flash Crash:” Dow loses 9% in one day, hits 7 month low but rebounded with a gain for the year.

2008: Financial Crisis: Dow loses 34% for the year

We have recovered from each of these situations and, with the expanding use of technology and algorithms driving the markets, these big rallies and sell-offs are becoming much more normal.

What is driving the markets right now?

The Federal Reserve has been raising interest rates for the past two years to slow down our economy and reduce inflation. Now that the economy is showing signs of slowing, there is fear of recession.

The “big seven” tech stocks that have been driving the markets all year have pulled back after huge gains. This has created a normal rotation out of tech stocks; however, we continue to believe technology stocks will continue to power the markets and our economy for years to come.

The uncertainty of the election is challenging for the markets as it is for all election cycles.

The situation in the middle east appears to be on the brink of escalation. The political and economic ramifications are weighing heavily on the markets.

As always, please do not hesitate to reach out to discuss the markets and your portfolios.

What a Noisy World Means for Your Portfolio

March 26, 2026
If it feels like the news cycle has been louder than usual lately, that's because it has been. Geopolitical tensions across multiple regions, shifting U.S. trade relationships, and a rapidly changing domestic political landscape are all contributing to elevated market volatility. We want to take a moment to share our perspectives on what this means for your portfolio and for the broader inflation picture. What's Happening Globally We are in an extraordinary moment. The U.S. is reshaping its economic and geopolitical relationships in ways that are accelerating global fragmentation and creating real uncertainty for businesses and investors alike. Energy markets have been particularly sensitive to these developments, with commodity prices responding sharply to supply disruptions and shipping route concerns. Most forecasters believe current disruptions are short-lived and expect prices to moderate as conditions stabilize, but the range of outcomes remains wide. Closer to home, affordability has become the defining political issue heading into the midterm cycle. The administration is rolling out consumer-focused measures around housing costs, prescription drugs, and credit, which could benefit some sectors while creating headwinds for others. What This Means for Inflation The inflation picture is nuanced right now. If current disruptions prove temporary, the impact on consumer prices should remain limited. However, if tensions persist and energy prices stay elevated, we expect to see some upward pressure on inflation over time. It is worth keeping in mind that energy prices, while attention-grabbing, are historically less influential on long-term inflation than factors like wage growth and domestic demand. The broader U.S. picture reflects a tension between tariff-driven price pressure on one side and softening economic momentum on the other. The Fed is navigating this carefully, balancing inflation concerns against labor market signals. For now, rates appear likely to hold steady near term, with modest cuts possible later in the year if conditions warrant. How We're Thinking About Your Portfolio Volatility is uncomfortable, but it is not the enemy of long-term wealth building. History has demonstrated consistently that market disruptions driven by geopolitical events tend to be temporary in nature. Long-term investors are best served by staying anchored to their goals and risk parameters rather than reacting to the news of the day. This environment does reinforce several principles we apply in managing your portfolio: maintaining thoughtful diversification, ensuring fixed income allocations reflect your actual income needs, and being intentional about where inflation and energy exposure sits within your overall strategy. We are monitoring developments closely and will continue to adjust positioning as the picture becomes clearer. As always, if anything here raises questions specific to your situation, please reach out. That conversation is exactly what we are here for.

What the New Tax Legislations Mean for Your Tax Plan in 2026

March 12, 2026
If you’ve been paying attention to the tax landscape this year, you already know the ground has shifted. New tax legislations signed into law last July made sweeping changes to the federal tax code—and for high-net-worth individuals and families, the implications are significant. Let’s cut through the noise and share what we think matters most. First, the seven-bracket individual rate structure from the 2017 Tax Cuts and Jobs Act is now permanent. That means the top marginal rate stays at 37 percent. For years, many of us were planning around the possibility that rates would snap back to 39.6 percent in 2026. That’s off the table. If you’d been accelerating income into prior years to avoid a potential rate increase, it’s time to reassess that strategy. Second, the standard deduction was made permanent at its elevated level. For most of our clients, this doesn’t change the calculus—you’re likely itemizing anyway—but it’s worth noting if you have family members in simpler tax situations. Third, and this is the big one for estate planning: the federal lifetime gift and estate tax exemption is now permanently set at $15 million per individual, indexed for inflation. No more sunset. For married couples, that’s $30 million you can transfer free of federal estate tax—and that number will only grow with inflation adjustments. If you’ve been hesitating on gifting strategies because of uncertainty around the exemption, that uncertainty is gone. There are also new wrinkles in the charitable deduction rules. Starting this year, itemized charitable deductions are only available for amounts exceeding 0.5 percent of your adjusted gross income, and the deduction is capped at 35 percent for taxpayers in the top bracket. That’s a meaningful change from the prior 60 percent AGI limit for cash gifts. If philanthropy is part of your wealth plan—and for many of our clients, it is—we need to rethink how and when you give. The SALT deduction cap has also been adjusted, rising to roughly $40,000 with phase-outs starting around $500,000 in modified AGI. For those of us in Texas, the lack of a state income tax softens this blow, but if you hold property in high-tax states, it’s still relevant. Here’s our takeaway after thirty years of doing this: certainty in the tax code is rare. When you get it, act on it. The permanent nature of these provisions gives us a genuine planning window. Let’s not waste it. If you haven’t reviewed your tax plan since last summer, let’s schedule a conversation.

Caught in the Middle: Sandwich Generation Financial Advice for Families Under Pressure

February 10, 2026
Caring for children and aging parents at the same time has become the reality for millions of families. The financial and emotional weight of this responsibility often arrives gradually — and then all at once. Those navigating this stage of life are known as the sandwich generation. What makes it uniquely challenging is not just the cost, but the constant pull on time, attention, and long-term planning. Effective sandwich generation financial advice must address all three pressures together: time, money, and estate considerations. The Hidden Cost: Time Caregiving demands time long before it demands money. Between medical appointments, school schedules, work responsibilities, and daily logistics, financial decisions are often pushed aside until they become urgent. This reactive approach increases stress and limits options. Proactive Elder Care planning helps families anticipate needs, organize responsibilities, and avoid crisis-driven decisions. With a clear structure in place, time becomes a tool rather than a constant source of pressure. Financial Pressure from Both Directions For many in the sandwich generation, every dollar is already spoken for. Supporting children through education and activities while helping parents with healthcare or living expenses can strain even well-managed finances. The challenge is maintaining momentum toward long-term goals while meeting immediate needs. A thoughtful Wealth Management strategy helps families: Prioritize cash flow intentionally Protect retirement savings Align short-term support with long-term security Preserve flexibility as circumstances evolve Without this coordination, it is easy to sacrifice future stability for today’s demands. Estate Planning Moves to the Forefront Caring for aging parents often forces conversations families have postponed for years. Questions around decision-making authority, asset coordination, beneficiary designations, and legacy planning become unavoidable. Addressing these matters early reduces uncertainty and helps protect family relationships during emotionally charged moments. Estate planning is not only about transferring assets — it is about clarity, dignity, and continuity across generations. A More Sustainable Way Forward The sandwich generation does not need perfection — it needs structure. With the right guidance, families can reduce stress, gain clarity, and create plans that reflect real life rather than idealized assumptions. Coordinating Elder Care and Wealth Management allows families to support loved ones without compromising their own future. At Affinity Capital, we help families navigate this complex season with perspective, intention, and care.