Our readers know that last Fall we reduced client stock exposure in light of what we thought was an overvalued market. For most clients, we allocated the proceeds to real estate, which has been their best-performing investment this year. We reduced stock exposure again early this year, anticipating higher interest rates and their impact on stock prices.
Our Approach
This “one foot in” approach kept growth accounts partially invested in case the Fed changed course and ignited a rocket ship rally. However, we now believe that instead of a pivot to reducing interest rates, the Fed will stay its course for the next two or three meetings and then pause rate increases.
Fed policy takes time to work through the financial system before getting the desired result – inflation on a course returning towards their target 2%. Inflation came from a demand imbalance which is correcting with supply improvements. However, with inflation hovering near 8%, there is still a long way to go without creating a recession.
Tamping down consumer demand remains challenging as most American household savings went up during COVID. This strength of the consumer will hopefully reduce the depth of a potential recession.
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We encourage our clients to continue living life without stressing over market conditions. Allowing us to focus on the markets and our clients to focus on enjoying life!
So, enjoy today and tomorrow, and let us do the worrying!
Contact us to discuss your situation if you’re interested in our time-horizon strategies.
