Wondering what’s been happening with the financial markets this year? Check out this video for a brief midyear financial market update from your friends at Seasons and SageOak Financial.
Problem with the video? The full video transcript can be found below.
“Hi, I’m Tyler Gray, Managing Director and one of the financial advisors here at Seasons & SageOak Financial! I’m here to bring you a special financial markets and investment update.
In this video, we’ll cover 3 points in the next few minutes…..
- What’s going on with the financial markets
- What we’re doing for our clients
- What to expect going forward
With that in mind, let’s jump right in….
1. What’s going on with the financial markets
Well, to tell that story, we actually need to go all the way back to the bottom of the Global financial crisis on March 9, 2009.
From that date forward through the end of 2021, we experienced one of the greatest financial market runs in the history of our country.
But since inflation has started to soar, it is now clear that at least some of those historic gains over the last 3 of those years, which included the worst of the COVID crash, was likely fueled by an excess of stimulus that was used to offset the devastation caused by the pandemic.
In other words, the Federal Reserve, the current and former president, and the current and former members of Congress, all turned on water hoses to put out the economic wildfire that COVID started, but they left the water on for too long and now it’s flooded.
As investors, we now find ourselves giving back some of those extraordinary gains over the last few years, as the Federal Reserve scrambles to grab some towels and dry up the extra cash in the system.
One of the ways they do this is by raising short-term interest rates. The fear, of course, is that the Fed will overtighten, tipping the economy into recession (assuming we’re not already in one!).
If that wasn’t enough, there are still supply chain issues of various kinds and a war in Eastern Europe with no end in sight. Both of these have also had an impact on inflation and the economy.
It’s not apocalyptic…but it certainly hasn’t been pleasant.
And quite frankly, after 2.5 years of this chaos….between the ups and downs of a global pandemic, an election that would not end, soaring inflation, rising gas prices, supply chain woes, the war in Europe…I think you get the idea.
We’re all, understandably, a little exhausted.
The good news is that all hope is not lost, which of course leads us to point #2…
2. What we’re doing for our clients
For starters, we empathize with the anxiety you may be feeling about your finances or investments and we’re available to talk through those concerns with you at any time.
We’re also working hard on your behalf behind the scenes to control what we can, including things such as….
A. Staying diversified based on your time horizon and risk tolerance.
For example, financial markets are down approximately 20% year to date, but fortunately, most clients who are diversified are down less than that because we don’t ever put all your eggs in one basket.
B. We’re also keeping an eye on your overall asset allocation and underlying investments
We make adjustments when appropriate, especially in situations where your goals or risk tolerance have changed significantly.
C. We regularly evaluate tax-loss harvesting and Roth conversion opportunities.
What this means is that, even when markets are down, you’re hopefully able to save some money on your tax bill with Uncle Sam, both now and in the future.
So, with that in mind, although we don’t have a crystal ball and certainly can’t control the economy, there are things we CAN do and ARE doing to ensure our clients have the best chance possible of reaching their goals, both now and long into the future.
This brings us to our final point…
3. What to expect going forward in the financial markets
Fortunately, businesses are still buying and selling and will continue to find ways to make a profit over time. That’s the heart of a capitalistic society.
And sometimes it is easy to forget, but if you own stocks in your portfolio, that’s exactly what you own…a small slice of hundreds (and sometimes thousands) of the largest, best run, most well-funded businesses in the entire world.
With that in mind, although we can’t guarantee when things will get better, we can guarantee, as the writer of Ecclesiastes wisely said so long ago, “…there is nothing new under the sun.”
In other words, there always has been and always will be financial and economic uncertainty, so what we’re experiencing now is not unprecedented or unheard of, even in recent history…
In fact, the last time inflation was this high, back in the 1970s and 1980s, what we saw after the economy finally turned a corner was a period of one of the longest and best returning financial markets in U.S. history.
So, if history is any guide, eventually, “the sun will rise” and, Lord willing, things will turn around. In the meantime, as always, we’re working hard on your behalf.
If you’re a client and you haven’t heard from us recently, we’ll be reaching out soon to schedule a call or meeting with each of you in the days and weeks ahead.
And if you’re not a client but would like a second opinion on your financial and investment plan, please don’t hesitate to reach out and we’ll be happy to help.
Until next time, God bless, and thanks for watching!”