Will the Fed raise interest rates aggressively? Or will the economic threat of recession force the Fed to slow its pace of rate increases? The outcome in what is shaping up as a sort of “game of chicken” remains to be seen.
Inflation is raging – there is no question. Prices of items as basic as eggs, butter and milk are increasing at crazy high rates. This is not to mention price increases for meat and produce. Gas prices have become crippling, just as workers return to corporate offices even part-time. Restaurants are still raising prices for diners. Home prices are still going up, although the recent rise in mortgage rates may cool the craziness. Wage increases are still happening (and not keeping up with inflation but also feeding into inflation) although there may be moderation in wages coming. The list goes on.
These are crazy times, almost chaotic. Chaos is defined as complete disorder and confusion – and parts of the world and our lives may be nearing that point, or at least feel that way. How does an investor get financial satisfaction in times like these? Carefully and patiently.
“Carefully” can equate to:
having a plan that addresses saving, spending, taxes, & investments
being able to monitor and adjust the plan, perhaps with an adviser
then continually executing the plan.
The “patiently” part can be more difficult and is just as critical.
Clearly, war and invasions have far more repercussions than merely financial. But somewhat luckily, the financial toll in most cases, for us as Americans (exception September 11th), has been what hits closest to home. And unluckily financially speaking, the biggest savers and investors are then most affected by the financial toll of war and invasions around the world.
Currently, the world – most notably the Ukraine, Eastern Europe and Russia – is experiencing the effects of an invasion that (God help us) may or may not turn into a larger situation. Specifically, the financial effects of the Ukraine invasion by Russia are being felt far beyond Europe and Russia. US and worldwide stock markets are down both from late 2021 highs and most notably in late February.
In times of stock market weakness, similar to year-to-date in 2022, it is human to experience fear. Part of staying on course with a savings and investment plan takes into consideration that fear is part of life.
Most recently, a number of investors may be expecting – and would be wise to expect – a market pullback due to more than a decade of steady market gains. However, this realization does not necessarily lessen or eliminate fear. Here is where the “Greatest Chart Ever” offers needed perspective.* Over a period of more than 40 years of intra-year stock market performance, the chart illustrates valid reasons NOT to allow short-term market moves (monthly, quarterly – even yearly) to lead to poor investment decisions. Why? Please read on.
With the whirlwind of interest generated by December’s edition of TGIF 2 Minutes covering “To Crypto Or Not To Crypto”, demand exists for at least a quarterly dedicated to the topic of cryptocurrency. For those who are already crypto experts, this volume of “Crypto Quarterly” may be elementary but a great number of experienced investors admitted limited knowledge and appreciated the information.
It is high time to talk about cryptocurrency, otherwise known as “crypto,” but where to start? Cryptocurrency is the broad term for digital currency or digital money. Blockchain is a technology that, among other functions, enables the existence of cryptocurrencies. Bitcoin is the best-known form of digital currency, although there are now more than 8,000 different cryptocurrencies many of which have no following or do not trade.
If all of this sounds too complicated for a Friday morning, read on anyway. We are all in this together. The diagram below first appeared in a May 2019 edition of TGIF 2 Minutes to illustrate how payment methods have evolved from Cash (far-left) to newer and often more convenient forms such as credit cards (“CC” in the diagram), then PayPal and Venmo (the “P” and “V”) and now digital forms such as Bitcoin (the “B”, far-right on the diagram). The world has rapidly gone digital in hundreds of ways including social and money.
Wow… year-end 2021 is fast approaching. As if 2020 was the year we all wanted to turn the page… it is deja vu all over again in 2021. BUT a positive spin can still be put on year-to-date 2021, especially with respect to market returns.
It may be too early to say that stock market gains, to date, have been better than decent in 2021. From the US small-cap index up 12%, to large-cap S&P 500 up 22%, to Nasdaq up 19%, to the Dow Jones up 13%, these are all solid year-to-date returns.
The original title of this edition of TGIF 2 Minutes was “Remember Brexit?” The reason that seemed appropriate is because recently and often during client reviews, conversations with potential new clients and from friends I am hearing the question, “Is NOW a good time to invest?” The slew of events that occurred in late 2020 and so far in 2021 have led both new and experienced investors to question the timing of investing new monies today.
Looking at the chart below*, there are events since 1970 and as recent as Brexit in 2016 that posed immense uncertainty and likely the same question. In fact, the chart illustrates the TEN YEARS from 2000-2010 dubbed “the lost decade”.
A timeless set of advice originally appearing in August 2014, again in January and October 2016, again in February and October 2018, August 2019 and as recently as May 2021… it can be wise to do a “gut check” on how extensively a rocky or down stock market could affect your emotions – and more important, your actions. There may be reason to establish a pattern of performing this exercise one to two times per year.
Adapted and shortened, “Gut Check in Rocky Markets,” can be applied to the times we are experiencing today in late August 2021, amidst US and global uncertainties of the geopolitical and pandemic variety. The central message stands: