Here's What the Market is Fretting about.
It's all about those higher #interest rates:
Conventional wisdom until a week or two ago was that Interest Rates Have "Nowhere to Go But Up". Here’s a chart of the yield on a 10-year U.S. Treasury note…
This morning it's below 1.3% — exactly where it was five months ago.
More than anything else, it’s falling interest rates that have blown up the conventional wisdom of earlier this year. For Wall Street, they're the proverbial canary in the coal mine. If rates aren’t rising, is inflation really taking off as promised? And if inflation is in retreat at least for now, doesn’t that mean the recovery is slowing?
That's what's giving Mr. market sleepless nights.
The old saying is that "(Bull) Markets climb a Wall of Worry", so we're not saying the bull market is coming to an end. Volatility is normal, and, big picture, we may just be getting started. It's a great lesson though -a warning to challenge your assumptions and make sure you have a diversified, all-weather portfolio that can succeed in multiple economic outcomes. Not a financial wagon hitched to any one economic view that can blow up your retirement plans if you're wrong!
Are you making big, binary bets on #gold or any one asset class assuming inflation, currency depreciation or any one scenario? Why take that chance? Did you see Covid shutdowns coming? Did you gauge the markets V-shaped recovery correctly? If so, can you do it next time? Do you even need to?
Our point is, great investors stay highly informed but also know that staying humble and flexible gives them a potential tactical advantage, They know, to paraphrase the late Secretary of Defense, that there will always be both "known unknowns, and unknown unknowns" and are never slaves to dogma. Like the famous British economist Keynes, they feel no shame in saying
“When the facts change, I change my mind - what do you do, sir?”
You DON'T NEED to make one-way bets or toss all your eggs in one basket in order to grow your wealth.
Our clients are living proof.
Speaking of lower interest rates, if you've missed the opportunity to refinance your mortgage for some reason, this may be a good time to get a quote, especially if you have 25 years or more left on your mortgage. And if you invest the amount you save, the numbers can become very compelling. Here's an example to get you started:
Would you value a complimentary review of your family's finances and investments?