Should I Be Excited or Concerned?
Has been a big question many of our clients and colleagues have been asking us the last few weeks and one we aim to answer in this month's Minutes from the Boardroom.
To help frame that question a bit better, it’s important to note that at the time of this writing many investment markets are at or near all-time highs, and for the past year, investors that didn't get spooked by the pandemic have been partying like it’s 1999 all over again. That’s right, believe it or not, just 12 months after hoarding toilet paper and with everyone getting vaxed and masked the markets and economy have been running hotter than Olympic Gold Medalist Sydney McLaughlin or for readers that prefer some masculinity - Olympic Gold Medalist Caleb Dressel. (Remember the Olympics just ended? Did you already forget? I did.)
However, not everything in the world is lilies, roses, and Gold Medals, right?
Lurking in the background are the growing concerns of the Covid Delta variant, the next possible Covid variant - whatever that may be, mask mandates, rising inflation, looming tax hikes, devaluing currencies, and an aggressive sell-off in Chinese markets (not to mention an aggressive China that appears to want to dethrone the U.S. and complete its commitment to gobble up Taiwan) along with the Taliban taking back control of Afghanistan.
All this while equity markets make new all-time highs and appear to be at a possible inflection point of resistance, placing markets in a position to either correct lower to work off some of the current excess or possibly freight train higher in a parabolic blow off that if it were to happen will most likely be memorialized in financial market history books for years and possibly generations to come.
What may be next?
Is August 2021 an inflection month investors will remember?
From the view of this market observer, August feels like an inflection month in many ways.
On the covid front, we have shifted from the jubilation many felt as the prospects of the vaccine providing immunity and allowing the economy to re-open, to concerns that the vaccine may not be a pass to immunity but more like a fancy flu shot that still leaves open doors of risk causing many people to think twice about planned travel and future activities until more is understood.
On the economic front, employment has continued to improve. There are still reports of labor shortages in certain regions which seems to be in a down-trending trajectory as federal unemployment benefits expire in the remaining states that still have such benefits. Landlords look to be squared off to have a battle with the Biden administration over the eviction and foreclosure moratorium and August may have marked a change in consumer sentiment as numbers were surprisingly soft - is it possible all the free money has been spent and additional debt has been accrued, sowing the seeds of a future consumer crunch?
The Retirement Red Zone
What’s the retirement red zone? It’s an ultra-sensitive time period within your financial life when your personal “long term” isn’t the same as Wall Street's definition of long term.
It’s a stretch of time that saddles the 5 years before and the 5 years after you retire. This is a crucial time when a mistake in the risk management of your retirement nest egg can make the difference between having a retirement in style or retirement of trepidation.
According to a recent article in CNBC many 401(k)’s and retirement accounts are experiencing record values with the overall average 401(k) balance hitting $129,300 as of June 30, up 24% from the same time last year. With an estimated 10,000 baby boomers retiring every day, the “retirement red zone” is positioned to be a big influence in retail investing and financial market trends over the next few years as many retirement investors shift from a mode of growth and accumulation to a mode of preservation and income.
For these reasons and more, is why we specialize in providing prudent strategic and tactical guidance to investors that find themselves in this dynamic and important time frame of life.
A common question and concern we often hear from individuals that find themselves in the Red Zone has been - Now that I have invested a lifetime saving and investing for the future, how do I avoid falling into the trap of underperformance that so many average Joe investors fall into? How do I responsibly transition the focus of my investment goals from growing as much as I can to growing while preserving and creating income?
Great question considering the average Investor underperformed the S&P500 by 55% for the period Jan. 2016 to Dec. 2019. (Dalbar 2020) We estimate 2020 and 2021 will be similar.
The Next Investment Wave
When it comes to the next 3 to 6 months for broader financial markets (think SP500, Dow Jones, Etc), as mentioned earlier we believe market watchers should expect to see an increase in volatility along with an increase in market noise within the news cycle. Make sure to get your investment allocation and diversification reviewed so you are prepared for what may be in front of us as investors.
For those of you that like to catch the next investment theme or wave before everyone else is talking about it, The Next Investment Wave is for you. Here, we break down some of the sectors and industries we have identified as possibly being in long-term growth cycles that investors may want to pay extra attention to for potential “alpha” opportunities, assuming the risks associated are appropriate.
In this month's The Next Investment Wave, we are bringing to your attention the world of Agricultural Technology. Yes, you read that right. And, no, not John Deere. We are talking much bigger than your daddy's tractor. We are talking about the vast realm of technology surrounding the production of agriculture and food.
Similar to many things in the last 10 years, the world of Ag Tech is experiencing some amazing advances in technologies that are designed to solve one of the biggest problems humans face in the future. A lack of food and water.
Meet Our Contributors
Founder, Quiver Financial
Director of Retirement Services,
Director of Alternative Investments,
Want market updates and insights directly in your inbox?
Subscribe to get exclusive access!
Advisory services offered through Quiver Financial Holdings, LLC.
Registered with the state of CA | Insurance License # 0B75303
501 N El Camino Real Ste 200 San Clemente CA 92672
949-492-6900 | www.quiverfinancial.com