As summer begins to wind down, we feel it is a good time to provide some thoughts on the financial markets.
There has no doubt been a lot of information to digest since the start of the year. The best way to understand the state of things is to steal the phrase from an old Clint Eastwood movie: We are all dealing with “THE GOOD, THE BAD and THE UGLY.”
We’ll take a few minutes to discuss each of these, but at the end of the day, it’s anyone’s guess as to what happens from here. Literally both the stock and bond markets could be 10% to 20% higher or lower from here. Much depends on reading the Ti leaves of the Federal Reserve.
Will they continue to withdraw monetary stimulus, creating tight money; will they continue to raise rates into a slowing economy; or will they eventually pivot and do the opposite? The answer to these questions could actually be the difference between a large gap between where the markets stand today, S&P 500 4100, or 10%-20% higher/lower.
First, THE GOOD…
Second, THE BAD…
Third, THE UGLY…
Since the Great Financial Crisis of 2008/2009, the Federal Reserve has been mostly loose with its monetary policy measures. This has acted as a backstop to the financial markets and kept investors singing its praises.
What we don’t know is whether inflation will react to Federal Reserve actions over the past six months.
Will inflation peak and begin to fall once disruptions from Covid 19 shutdowns and supply-chain bottlenecks begin to ease?
Will the stock market look past some of these issues and see brighter skies ahead? Often the market defies logic, tends to see past issues, looks to the future rather than the now. We see this time and again, but will this time be different?
Here is the message for investors. If you can look past all the noise, invest for the future, three to five out, with some of your portfolio, then this may be a good opportunity. Presently, to get back to the highs for the year, the S&P 500 would need to climb approximately 16%.
If you feel it’s a good risk/reward, give us a call. Take a few minutes to complete our online risk profile assessment.
With all that is taking place, we cannot say with any certainty what will happen for the rest of the year, we don’t have a crystal ball. We can guide investors where we think the probable sectors or funds of the market could be if one feels inclined to add stock-market exposure. That’s a truly interesting topic if you’re so inclined to have the discussion.
Thank you for taking the time to read our thoughts…
Mike Reinhart & Leonard Rhoades
You can access our online risk profile assessment by going to:
www.GlobalWealthSolutionsLLC.com and clicking on the tab entitled, (Risk Assessment Quiz)
Advisory services offered through J.W. Cole Advisors, Inc. (JWCA). Global Wealth Solutions and JWCA are unaffiliated entities