Hello My Friends, and Happy Springtime, it is long overdue. Happy Mother’s Day too! Our Northeast weather gave us an early teaser with some warm sunny days in early Spring, bright with sun and early blooming flowers, but alas, it has been rainy and wet as of late. But, no baseball strike, so “Batter Up!”
Springtime is euphoric, lots of plans are made for the months ahead; so much we want to do before the leaves and the temperatures start falling again. Springtime invites optimism. And optimism abounds the financial markets too, it always does.
Though the financial picture lately is one of concern and caution, we must consider rationally that our portfolios are valued only lower than our recent all-time highs. And these all-time highs have come in a short period of recent record performance from equities in the financial markets, and uplifting real estate values. Regardless of the reasons for this per price appreciation, the last few years have rewarded investors with healthy portfolios, and low interest rate financing.
While it does seem that the situation is dire for stock prices, interest rates, and inflation; remember that these times are not like those of other great distresses in the past. We have low unemployment, a healthy personal savings rate, reasonable levels of personal debt, and an economy still improving from pandemic restrictions.
Inflation must now be our most focused priority. Again, healthy gains in asset values, wages, and employment in the last several years will help get us through it, and regardless of the headwinds that dominate. We have had an extraordinary long run of low interest rates, which must now naturally rise.
We are long-term investors. We are preparing for long-term financial security; mostly for our retirements, healthcare needs, and legacies to our children and heirs. Sound, prudent investing with patience through these times will deliver on these objectives. History is on our side.
When was the last time someone said, “… These are really crazy times… aren’t they?...”. My answer to that is, rhetorically: “…Well, when haven’t times been crazy?...” Just consider the last 50 years, look at all the crazy things that happened! The list is too long to print. And yet, where was the stock market 20 years ago?, 40 years ago? And where will it be 10, 20, and 40 years hence? Don’t know, but it certainly won’t be lower than it is today. When someone asks me what I think about a financial event or headline, I say… “Unbelievable!…”, Because it is unbelievable, and it always will be unbelievable. We prepare ourselves for the unbelievable by being invested soundly and prudently for the long term. Patience and time are the great equalizers of financial security My Friends.
And what’s driving the recent volatility in stock prices lately? What makes the market move so abruptly and violently in a single day, and then reverse itself even more violently the next day? The answer: it just might be trading for short-term gain and profits. Ah, …the traders; those short-term traders who are not investors like you and me. WE, are the investors; WE, must not be influenced by short-term activity, which will eventually subside. Historically, the market is appreciating more often than it is falling. It’s like the ocean: most of the time it looks calm and inviting, but sometimes it looks a little restless, unsettled and choppy; and even less of the time it gets violent and unpredictable; and that’s when we stay away from it; we just wait for it to calm down, right?
Now, I haven’t yet mentioned it, though you’re probably thinking it… “What is the effect of politics and the media on the markets?” Well, here’s my answer… Mr. Market doesn’t care what person, nor what political Party occupies the White House or controls the Congress. Our blessed United States Constitution insures that we rotate leadership on a regular basis. Mr. Market reacts when he knows what the situation is, or isn’t, for that matter: tax law changes, interest rate changes, government spending changes, wars; etc. …that’s what moves Mr. Market; not the television nor social media. Mr. Market does well when the rules and situation don’t change, and he gets upset when the rules and situations do change. And Mr. Market has had it pretty good for the last 4-5 years, hasn’t he? So, one then might conclude that given the events of the last two years that the financial markets should be much lower? But they’re not, and that’s something to think about. Maybe Mr. Market knows something that we investors don’t, or maybe he doesn’t. We don’t know the answer, but we use the past as our guide.
As always; you may contact me to discuss matters as needed. We are still adhering to certain pre-cautionary pandemic related safety protocols, so telephone and virtual type meetings are preferred.
As always, I remain; Your Advisor and Friend;
Mark J. Angelo CFP