Weekly Market Insights: 2-18-22 Inflation and Ukraine Fears Cool Markets
Excuse the rambling but there is a point at the end, I promise!
I have been helping families plan their finances for over 22 years now. Beginning my career selling weekly insurance policies on a “debit route” in the rough part of town in Cincy. I later upgraded to a stockbroker (stock jockey as I call them) making 327 cold calls a day for Stifel Nicolas. I was good at it but hated it. Back then, before the do not call lists and 9/11, you smiled and dialed and convinced “customers” to buy stocks from a pre-qualified list faxed to you every Monday morning. We were also encouraged to sell muni’s and corporates but staying away from “junk” bonds or mutual funds since "those types of investments could harm clients". As I recall, I sold about 25K worth of Paul Brown Stadium Muni offerings and who knew that would lead them to the super bowl one day (insert giggle here).
From retirement to debt to death to college, cars, mortgages, and businesses. If it had a dollar sign in front, I have planned for it. Out of all those families and various seminars, (at one time, we were doing 3 seminars a week to standing room only venues), I have learned more from clients on what NOT to do than classes and books have taught me about what to do.
There are a few simple but sound insights that I have learned over the years working with clients that I would like to share.
Money is most influenced by the way you think about it.
You’re thinking creates a behavior model.
Your behavior creates an outcome.
Seems pretty elementary and simple but you would be amazed at what we see and hear over time from prospects & clients.
Money is a tool to be used to improve your quality of life or the quality of the lives you hold most dear. Money has no inherent value. Once we were taken off the gold standard and moved to a “currency” its inherent value changed forever. It’s like a collectible baseball card or work of art in a way. You will only receive what someone else thinks it is worth.
So back to the beginning-The way you think about money creates your behavior and your behavior creates the outcome. If you don’t think about it, you will not know how to behave with it and we all know what happens to us when we do not know how to behave! It never ends in our favor.
Money should be taught like language or science since we all spend nearly 40 years of our adult lives trying to accumulate enough of it to live comfortably and do what we ultimately want to do, whatever that may be?
You may be asking yourself, why on earth is he speak about today’s “planning” topic in this way?
So much of what it is we do for client’s centers around their needs, their wants and their wishes and almost every client when we first on board them are malnourished from a account value and savings amount stand-point. They might have added money to their 401K but have no idea what else they should be doing to enhance or benefit their financial future given the financial tools they have. Most of our clients end up with more, having worked with us because of 3 things we do over and over and over throughout our time together.
We help them to create a comprehensive plan that considers their current financial resources and examines their top 3 goals and then speak about what it will take for them to achieve those goals. It is significantly more than just maxing out their 401K.
We then host regularly scheduled update meetings where we bring to their attention, in real time and laymen’s terms, where they are and what we expect to happen next. We allow time for questions and concerns and time to talk about what’s happening in their financial lives so that over time, they know we are a resource for them to bounce ideas off or help to figure out a problem or solve for an outcome they may be faced with.
We periodically review their plan to keep it relevant to their lives and current situations as well as to remind them of why we are doing what we are doing. If they are off track, what we need to do to get them back on track and if they are doing well, reminding them to stop and smell the flowers occasionally.
In essence, over time we are helping them to change the way they think about money which alters their behaviors in real time allowing for better outcomes over time. It is really that simple but extremely difficult to be consistent with over years and various life circumstances and difficulties.
Yes, we have a process that is proven and personal for each client. Is it perfect, probably not but it is effective and has been proven many times over to work.
The Summit Pathway Discussion has numerous steps and strategies that all sync together for the sole benefit of the client we serve. In future emails, we will walk thru this discussion and hopefully offer key insights into the why and how it works.
Till we speak again, enjoy this….cold and snow?
PS: I will be out of the office the first week of March but everyone who is important will be here so feel free to give them a call if you need anything.
General Market Commentary
A hot inflation print and the growing concern of a Russian invasion of Ukraine sent stocks tumbling late in the week, leaving major indices lower for the five-trading days.
The Dow Jones Industrial Average skidded 1.00%, while the Standard & Poor’s 500 retreated 1.82%. The Nasdaq Composite index slumped 2.18%. The MSCI EAFE index, which tracks developed overseas stock markets, advanced 2.26%.1,2,3
A Double Whammy
Mid-week, a fresh batch of positive corporate earnings surprises lifted investor sentiment, helping stocks claw back losses with technology stocks posting some of the sharpest gains. But January’s inflation report, set for release on Thursday morning, remained investors’ biggest concern.
When the report hit, it showed accelerating inflation, and stocks dropped and bond yields bounded higher. Stocks managed to recover from the initial reaction to the unexpectedly high inflation number. But when the President of the Federal Reserve Bank of St. Louis commented that the Fed may consider a more aggressive move against inflation, stocks resumed their slide lower. The stock skid accelerated into Friday on White House reports that an invasion of Ukraine by Russian forces may be imminent.4
Prices of consumer goods accelerated in January, rising 0.6% from the previous month and 7.5% year-over-year. This annual inflation rate was the highest since 1982. Core inflation, which excludes the more volatile food and energy prices, was 6.0% higher from last January.5
Many economists and market analysts had expected inflation to moderate, but driven by a surge in prices of used cars, gasoline, and energy, inflation remained at elevated levels. The persistence of inflation at these heights has fueled investor concerns that the Fed might consider a more aggressive 50-basis points increase in short term interest rate.
Friday: Existing Home Sales. Index of Leading Economic Indicators.
Source: Econoday, February 11, 2022The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.
This Week: Companies Reporting Earnings
Tuesday: Zoetis, Inc.(ZTS), Devon Energy Corporation (DVN), Marriott International, Inc. (MAR), ViacomCBS, Inc. (VIAC).
Wednesday: Nvidia Corporation (NVDA), Cisco Systems, Inc. (CSCO), Applied Materials, Inc. (AMAT), Shopify, Inc. (SHOP), DoorDash (DASH).
Thursday: Roku, Inc. (ROKU), Walmart, Inc. (WMT), The Southern Company (SO).
Friday: Deere & Company (DE).
Source: Zacks, February 11, 2022Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.
“I imagine one of the reasons people cling to their hates so stubbornly is because they sense, once hate is gone, they will be forced to deal with pain.“
– James Baldwin
How to Verify Your Identity When Calling the IRS
When calling the IRS, you can expect them to verify your identity before delving into personal information. Here’s what you’ll need to verify your identity:
Social Security number.
An Individual Taxpayer Identification Number if you have one instead of your SSN.
Your filing status.
Your prior tax return. You may need information from your prior year’s return to answer certain questions.
A copy of the tax return you’re calling about.
Any letters or notices you’ve received from the IRS.
Having all this information handy before you call the IRS will make the process faster because IRS phone operators will only speak with the taxpayer or a legally designated representative.
* This information is not intended to be a substitute for specific, individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.
Tip adapted from IRS.gov6
How to Get the Recommended 10,000 Steps a Day
Getting 10,000 steps in throughout the day (or moving at all!) might sound like an impossible goal, but there are a few small tweaks you can make throughout your day to get those feet moving. Here are a few ideas:
When running errands, park your car further away and walk from there.
Create a “loop” in your hours that you can walk in between meetings or when you need to get up from your desk. Your loop could even be around the kitchen island!
Walk in place while watching TV.
Listen to a great podcast or audiobook while you walk. It will make the time go by faster!
Tip adapted from Organizing Moms7
What is the smallest number of cars that can be driven down the road in this formation: two cars ahead of a car, two cars behind a car, and a car between two cars?
Last week’s riddle: They never move, even when we walk on them, but signs and arrows may indicate that they go “up” and “down.” What are they? Answer: Stairs.
The blue domed churches of Agios Spyridonas and Anastaseos, Oia, Santorini, Greece.
Footnotes and Sources
1. The Wall Street Journal, February 11, 2022
2. The Wall Street Journal, February 11, 2022
3. The Wall Street Journal, February 11, 2022
4. CNBC, February 10, 2022
5. CNBC, February 10, 2022
6. IRS.gov, September 1, 2021
7. OrganizingMoms.com, September 30, 2020
Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.
The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.
The market indexes discussed are unmanaged, and generally, considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results.
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