Blog

As the old saying goes, “There is no such thing as a free lunch”. Volatility is inherent in equity investing. It’s the price you pay to earn a higher return over time. A truism quickly forgotten during bull markets that gets replayed during down times.  Every year there seems to be at least one or two catalyst that pop up, where economic pundits say, “this is the big one”.

If you didn’t stay up late (past 11:00 pm) you woke up to the new events in Eastern Europe. Everything changed and war is now reality. While the end game is unknown, the next sequence of events is inevitable. As with recent conflicts, it will play out in living rooms across the globe and we will be transfixed on our tv’s (or devices) 24/7. For all of us, maintaining mental balance (if not sanity) will be a challenge.

It’s not your imagination… being online is getting scarier every day. Hackers, cyber criminals, and dark actors appear everywhere. I have had many true-life stories from clients who have been hacked or worse. The financial cost is bad. The emotional price is high as well.

As January pushes on, things look (and feel) financially different than 2021. Markets are volatile and not in the good “going up” way. The cost of things is increasing. Spot shortages of everything is the norm. Interest rates are on the rise. In short, it doesn’t feel like fun anymore….

Last month we wrote an article titled “Why is the Market so High?” Our prognosis was that many large-cap companies were benefiting from the current interest rate environment and pushing the overall market higher.

Hopefully, everyone had a great Christmas and is making plans for their own version of New Year’s Eve. I want to start by thanking you all for your continued support throughout the year. We truly do appreciate it. A few housekeeping notes before I dive into the year-end note…. As mentioned before, we are actively accepting referrals from our clients in the new year. With the additional capacity, we can accept and service new clients. If you have a friend or family member who could benefit from our services, let us know. The same goes for electronic writings and rantings. If you have someone who could benefit from our rantings, writings, and financial planning topics, let us know and we can add them to the distribution list. Last, with tax season on the horizon, we are gearing up for the deluge that is sure to follow. If you would like to chat and do some pre-planning, let me know. We can always set up a time to make it happen. Enjoy.

As we cross the finish line into 2022 (good riddance to 20 and 21), it seems everything old is new again. Covid is cycling back and the world is in various stages of dealing with it. As inevitable as it would have seemed (virus in the winter), catching people off guard is the theme. One entity that was NOT caught off guard was the market. Specifically, the Bond markets. As we saw inflation on the rise during the Fall, and costs going up, the 10 year treasury stubbornly did not follow suit. As we wrote about “something being off and not making sense”, the answer now is clear. Once again, the markets had it right while the media had it wrong. The Covid winter was, and now is, a thing. Was baked into the cake months ago…. We just didn’t realize it yet. The arm waving of an overheating economy was just that…. arm waving.

Last week, I wrote about the risk of investing in individual stocks and highlighted the chart below. As you see, the Nasdaq 100 currently sits near all-time highs, while many speculative stocks have entered and surpassed bear market territory (A decline of 20% or more). This week, I’ll elaborate on this idea, as well as give you some insight into a few other risks we keep our eye on when constructing portfolio