Get Confident
Turn on the news and chances are you will hear something about rising inflation, how central bank policy is tightening, and Covid-19 infection rates continue to threaten the bull run for stocks.
The massive inflationary spikes that seem to be hitting like a sledgehammer probably is far up the list. We are feeling the effects of record pace growth in some areas, specifically on products that are necessary for everyday living like gasoline, electricity, and groceries.
Plus, a CNBC recent post has stirred up a lot of conversation about wages vs inflation. “It is not certain rising wages will be enough to outpace inflation. As inflation takes hold, wages may increase, too. The question is, will it be enough to outpace the rise in prices?”
Monitor what you think about!
What affect does the rise in prices have on the stock market? Investors, the Federal Reserve, and businesses continuously monitor and worry about the level of inflation. (Inflation is the rise in the price of goods and services and reduces the purchasing power each unit of currency can buy.)
Rising inflation can have an insidious effect as input prices rise, consumers purchase fewer goods, revenues and profits decline, and the economy slows for a time until a measure of economic equilibrium is reached.
Consumers usually feel a “pinch” when goods and services cost more. However, businesses and consumers eventually become acclimated to the new pricing environment and consumers become less likely to hold cash.
For a season, higher inflation can be good, because it stimulates job growth, but it also impacts corporate profits. Sounds like a vicious cycle? Corporations may worry about the future and stop hiring, which reduces the standard of living for many, especially those on even higher “fixed” incomes.
Confusing? It can be since inflation seems to impact the economy and stock prices but not at the same rate. There is probably no one answer to the question of inflation. Individual investors need to sift through the confusion to make wise decisions. This is where my Alphavest team can help. I understand the fact that different groups of stocks can perform better during periods of high inflation, and I can help you adjust for this shift.
Get Confident! Add a 3-Year Bucket to your planning schedule!
In fact, Kristina Hooper, global market strategist at Invesco, included a potential U.S. stock market correction in her top 10 predictions for 2022.“There is likely to be a US stock market correction in the first half of 2022, but I expect a relatively swift recovery.”
I agree with Hooper, who goes on to say, “It’s been so long since we have had a sizeable correction that the odds of one have grown — and increasing the odds is the fact that the Federal Reserve is starting to normalize monetary policy in the first half of 2022 and may start to hike rates.”
Last week saw U.S. equities endure their second-worst start to a year since the Lehman Brothers collapse, driven by further hawkishness from the Federal Reserve and a sell-off for highly valued U.S. tech stocks.
The rapid spread of the omicron Covid-19 variant around the world has also brought a persistent cloud over the equity outlook in recent months. Despite all of this, analysts largely DO NOT foresee a serious fall for stocks in 2022! This is excellent news!
So, my advice is to be aware of what’s going on with our financial climate, but don’t be paralyzed by it! Don’t get stuck! If you are looking at empty grocery store shelves and have a feeling of uncertainty, let’s talk. Perspective can be your reality or so it seems until you unpack the truth concerning future growth.
How will you quiet the noise? Will your portfolio weather the storm? It’s a perfect time to consider your 3-Year bucket. Here’s the link to Get Confident!
Connect with us today. You don’t have to be paralyzed by the nightly news or Wall Street’s games. Don’t be overwhelmed with the idea of where to begin, restart or change your current investment portfolio.
You can start today, right now, by investing with confidence. Call me for a free 15-minute consult and checkup! If you have NOT downloaded your copy of the third edition of The Liberated Investor, you can do that now so that you can understand the Wall Street game and play it better!