Spring Showers, New Highs and Good-Bye Recession Fears
Thursday, May 02, 2019
As I am writing this note the sky is gray, the temperature is in the mid-40s and of course it is raining. I have lived in Michigan all my life so I should be used to this trend by now, but I will admit that sunshine and warmth had better arrive soon. The nice thing is that in Michigan the weather can change quickly and dramatically. You can say the same about how the investment world works and how the equity and bond market trends can change as quick as the weather in Michigan. As this year has started, during my reviews with each of my clients I have asked each one the same question. How did you feel when you opened your December 31, 2018 investment statements?
If you are reading this, I am asking you the same question. Did you cry? Did you simply not open the statement because you did not want to see the bottom-line number? Did you blame your advisor? Did you blame the president? Did you call your advisor and demand that changes be made to your allocation? Think about how your emotions in the moment may have impacted your long-term goals for investment. How did your emotions change when you opened your March 31, 2019 investment statement? One of my main functions as an advisor is to do my best to help an individual do his or her best to take the emotions out of an individual’s long-term investment plan.
In the 4th quarter of last year the negative mood of the markets had many believing that 4-5 interest rate hikes were coming in a short period of time, the real estate markets were going to fall apart, earning expectation of the S & P 500 were falling, and the “recession” world was being thrown around by many in the financial press.1 What a difference three months make! Two of the three leading equity indexes have hit new all-time highs, and last Friday the first quarter GDP was reported to be 3.2% by our government.2 Just less than two months ago, conventional wisdom though the US economy was in real trouble. The fears of recession have quickly disappeared, and now the investor is faced with the decision that with the equity markets at or near all-time highs should you still be considering investing in equities at this time.
If you are investing for your future on your own without the help of a financial advisor, it can be very daunting. If the last 6 months have frozen your decision-making process or even worse, you decided to make changes at the end of the year and now you have missed the rally and recovery our office is here to help you define your goals. One of the basic premises our office lives by is that most people don’t plan to fail, they just fail to have a plan. Our office’s mission is to help individuals and families create wealth, maintain that wealth, and transfer that wealth to the next generation. Planning for financial independence is unique for everyone. Since 1960 our office has helped families identify a plan, achieve their financial goals in the areas of retirement, wealth management, risk management, and estate planning. If you don’t have a plan for your financial future make the decision to “Discover the Wiser Advantage”. When it comes to a future retirement, it’s Wiser to plan.
1Yardeni Research, Inc. S & P 500 Earnings Report, April 29,2019
2,3Barrons, “Are Stocks at All Time Highs”, April 24, 2019
GDP, Bureau of Economic Analysis, April 26, 2019
S&P disclosure: S&P 500 Index is an unmanaged group of securities considered to be representative of the stock market in general. You cannot directly invest in the index.