During the past quarter, the best performing asset classes were large U.S. stocks (S&P 500), short-term global bonds, and small U.S. stocks. The following chart shows the 3-month, 1-year, and 30-year performance of many DFA funds (representing different asset classes) compared to the S&P 500 Index:
Market Returns for the period ending December 31, 2024
| DFA Fund / Index | 3 Month Return | 1 Year Return | 30 Year Return* |
| S&P 500 Index | 2.41 | 25.02 | 10.92 |
| DFA World Core Equity | -1.89 | 14.91 | N/A |
| DFA U.S. Large Value | -2.31 | 12.75 | 10.36 |
| DFA U.S. Small | 0.51 | 11.49 | 10.56 |
| DFA U.S. Small Value | 0.14 | 9.57 | 11.43 |
| DFA Real Estate (REITs) | -7.95 | 5.52 | 9.53 |
| DFA Int’l Large | -7.63 | 4.56 | 5.46 |
| DFA Int’l Large Value | -5.93 | 6.88 | 6.32 |
| DFA International Small | -7.71 | 3.77 | N/A |
| DFA Int’l Small Value | -6.49 | 7.89 | 7.04 |
| DFA Emerging Markets | -7.26 | 6.90 | 6.24 |
| DFA 5-Year Global Bonds | 1.19 | 5.37 | 4.17 |
| DFA Inflation Protected Bonds | -3.15 | 2.01 | N/A |
*Note: Returns for periods greater than 1 year are annualized. Top 3 returns are in bold.
The global stock market* declined by -1.89% during the fourth quarter but finished the year up 14.91%, while the U.S. bond market** declined -3.35% for the quarter and finished the year up 1.24%. The year was dominated by big U.S. growth stocks***, which grew by 32.69%, powered by optimism over A.I.’s potential and strong corporate earnings.
Inflation continued to decline over the course of the year, starting the year at 3.1% and ending November at 2.7%. This led to the Federal Reserve cutting interest rates by 0.25% in November and again in December, for a total decline of 1% in interest rates over 2024. Expectations are for two additional quarter point interest rate cuts in 2025, but upcoming inflation and job market data will be the true determinant of what the Federal Reserve actually does.
The start of a new year also means it’s stock market prediction season. Every year, big Wall Street investment firms make their forecast for what will happen to the stock market in the upcoming year. Without fail, the vast majority of the predictions are not only wrong, but substantially wrong. As Yogi Berra famously said, “it’s tough to make predictions, especially about the future.”
We caution you to take these predictions with a grain of salt. Enjoy the entertainment aspect of reading them but keep in mind anyone who truly could predict the future of the stock market would be foolish to tell anyone else and would be so fantastically rich they wouldn’t be wasting their time giving quotes about it. In fact, these same analysts are the ones who all but guaranteed the U.S. economy would fall into recession in 2023 and 2024, which never happened.
Fortunately, you don’t need to predict the future to be successful at investing. Building a diverse portfolio, sticking with it when markets go down, and regularly rebalancing remain the key tenants of investment success.
Lastly, we are getting to that time of the year when you need to start gathering all your tax documents. You will receive your 1099s directly from Fidelity via email, so you will need to log into the Fidelity website to download them. Please note that we do not have your 1099s. As a reminder, if you have changed your tax preparer, please fill out a new consent form so that we can request your tax returns be sent to us. If you have not provided us with a consent form or you do your own taxes, then please upload your completed 2024 tax return into the “Shared Docs” folder in your eMoney vault.
As always, please don’t hesitate to call or email if you want to discuss something. We greatly appreciate the trust you have placed in us to help guide you forward.
Happy New Year!
*As measured by DFA World Core Equity Portfolio (DREIX)
**As measured by Vanguard Total Bond Market (VBTLX)
***As measured by Vanguard Growth Index Fund (VUG)
About Christopher Jones
Christopher Jones is the Founder and President of Sparrow Wealth Management, a fee-only financial planning and investment management firm. Before entering the investment field, Chris was a management consultant for Deloitte Monitor. He graduated summa cum laude from Brigham Young University with a B.S. in Economics and a minor in Business Management.
