It’s often said that driving a car requires rear view mirrors. But you'll also need a windshield to see where you are going. So we all probably agree you need both a windshield and a way to look behind you. (We’ll leave backup cameras out of this and pretend we just use mirrors for nostalgia.)
When we look back at the recent drop in capital markets it is a unique one. Not just stocks dropped, most fixed income is down double-digits or close as well! Aren’t precious metals supposed to go up during that time? You guessed it, they didn’t help! I won’t even discuss Crypto as it is still unquantifiable. I’ll be kind and leave it at that.
I have a few strong messages. Historically when we hear there is a recession underway, the market is usually already way down…and when we hear the recession ended a few months earlier with Revised Data the market is usually already way up. So the rear view mirror tells us, “Yep, that just happened behind us.”
Now, let's use the rear view mirror to help us with the front view…and you heard me say this for the last 5 crashes and recoveries: I want you to find me one time in the past, where we dropped like this and did not recover to reach a new ALL-TIME high. (The room goes silent except for the typing of fingers into search engines on cell phones looking for the history.)
Yes indeed, if we set your goals in alignment with your timeline, we don’t overreact in the short term. We do react by increasing commodities exposure or lower P/E Value exposure….but it is never “Oh my I’m going to cash and wait this out.”
If you feel your goals have changed, we should speak. Inflationary times are never a good time to abandon real estate and stocks for low-yielding cash. That said, if you haven’t seen my article on Series I-Bonds, please reply so we can resend it to you…it’s a great opportunity for 9.62% on up to $15,000 of your safe money…$25,000 for couples.
Enjoy the 4th of July holiday!