WAKE UP!!
Take a look around: economic danger is everywhere.
Historically, September is the most dangerous month of the year for stocks. October is the second most dangerous month.
This is compounded by the fact that the global economy is facing one of the most perilous times in history. Knowing this information, what should I be promoting to my prospects & clients?
SAFETY FIRST!!
Safety, safety, safety!
The market melt-up of the last 2 or 3 years has lulled many people to sleep and has even tricked some people into thinking that they’re genius investors (when in actuality, many are simply speculators).
So, my rallying cry is this:
Let’s see a return to solid planning; a return to common sense; a return to fundamentals.
The tide could be about to change. Did I mention that economic danger is everywhere? Although the following list isn’t all-encompassing, let’s check out several examples:
- On Monday, the largest block of unemployment benefits expired
➡ People are going to be hurting, and they’ll be spending less money, and moving less money throughout the economy - The Supreme Court struck down Joe Biden & the CDC’s attempt to continue the moratorium on evictions. In addition, there are an alarming number of homeowners behind on their mortgages
➡ This could lead to a rash of evictions and foreclosures, which could bring down the hot housing market. Housing is a major driving force of the economy - Inflation has run 12-month cycles of 5% for 3 consecutive months; this is the first time this has happened since September 2008 (in the middle of the financial crisis and right before the stock market crashed)
➡ Is this level of inflation a leading indicator? Could it point to weakness in our equities market today? - Disappointing jobs report for August: 720,000 new jobs expected vs 235,000 actual
➡ Is the recovery stalling? Is growth slowing? - Covid hospitalizations have ticked higher
➡ Our heavy-handed government always wants to look like they’re in control like they’re “doing something”. Their mitigation measures have been disastrous for the economy. Are they going to impose more restrictions that will lead to economic constriction? - Consumer sentiment has plummeted – August 2021 marks the 7th largest drop in the last half-century, according to an article by Barron’s (https://www.barrons.com/articles/consumer-sentiment-coronavirus-economy-inflation-51630540457?tesla=y)
➡ The economy & stock market is made up of human beings, who are very emotional when it comes to money; could a negative outlook lead to a panic sell-off if the market starts to go lower? - Geopolitical tensions in the middle east have risen
➡ Who knows how this could affect the U.S. or world economy? - The Fed has ramped up its talk of tapering asset purchases and increasing interest rates
➡ Companies like being able to borrow money for free (or nearly free). It helps them to grow and expand; they seem to not like rising interest rates.
➡ Recent memory shows us what can be the result of increasing interest rates (anyone remember multiple stock market indexes dropping 20% during the “Christmas Crash” of Dec. 2018?)
There are many bearish factors at play; this isn’t a prediction, and it isn’t financial advice of course. But even Business Insider published an article just yesterday, calling for a 15% correction in the S & P 500 by the end of 2021.
Lisa Shalett
They were quoting Morgan Stanley’s Lisa Shalett, chief investment officer of Morgan Stanley’s wealth management division. She warned that the continued strength of the market isn’t constructive, and instead indicates that stocks have not repriced risk in any meaningful way.
“While we see the economic cycle and the bull market remaining intact, we think a correction is necessary to restore risk premiums and preserve forward returns for selective and active stock pickers,” said Shalett. “The broad index needs to pause, consolidate its historic run and position for lower liquidity, higher real interest rates, and higher inflation.”
The CIO explained that what’s really driving the market’s current upward movement is investor faith that the Federal Reserve will delicately adjust its monetary policy without making any mistakes.
I think it’s laughable that we are depending on bureaucrats in the government and the Federal Reserve to get it right.
If you want a firsthand example of government ineptitude, please consider what is happening in Afghanistan; or the fact that headlines dated August 26, 2021, revealed that 89% of the money earmarked for rental relief during the pandemic has not made it to renters or landlords.
Many lives have been disrupted, even harmed by the government’s lack of organization providing these benefits.
Yet, because the government continues to fail at every level, many Americans do not receive either the assistance or the benefits they have been promised…. even when not delivering that assistance becomes life-threatening.
If these life-threatening situations like Afghanistan do not cause the government to rise to a level of efficiency, what can we expect for programs like Social Security, Medicare, and Medicaid?
What can we expect for the viability of our currency; or maintaining reasonable tax rates so businesses and families can grow & thrive?
Can the government effectively employ new tactics that will allow them to raise the revenue they need to run our country?
When will they be able to determine when they have printed too much money or reduced the interest rates to such a low level that those low-interest rates cause more harm than good?
Do you think it’s wise to put your financial and retirement future in the hands of this government? Do you think the government has our backs – or does the government have its own back?
When the chips are down, who are they going to look out for – the citizenry, or themselves?
Isn’t the thing that makes America so great and so wonderful the fact that we all have freedom of choice? We can choose to build financial and retirement success despite the government!
Isn’t the only problem that it is a choice? You must make a choice to build a strategy to have that success, or you make a choice to do nothing and keep praying that the government gets it right.
They are both choices.
Do you wish to make a choice to build a strategy that will allow you and your family to have control over a successful financial & retirement future, or do you wish to cede your control to the government and hope they will have your back?
If you wish to take back control, the first step is reaching out to a financial professional like myself who can help you plan for your financial future, based on your unique situation & your personal goals.
If you choose to rely on the government for your financial well-being, I fear that you will be sadly disappointed.
Ron Sneller is a fee-based financial consultant. A veteran of the financial services business for 10 years, he’s helped clients with their mortgages, insurance, investments, and retirement planning during that time.
Through education, empowerment, and action, Ron helps his clients take back control of their financial life to give them more clarity, focus, and security.
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