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Volatile stock markets and uncertain economic conditions can be stressful and unsettling.  Investors usually ask what they should do during turbulent times.  Below are some tips Fidelity Investments offers to navigate volatile markets.

  1. Keep your perspective:  Downturns are normal

On average since 1926, stocks have dipped into bear market territory every 6 years with losses averaging almost 40%.  While market downturns may be unsettling, history shows stocks have recovered and delivered long-term gains.  Despite market pullbacks, stocks have risen over the long term.

  1.  Have a Financial Plan you can live with – through market ups and downs

Your mix of stocks, bonds, and short-term investments will determine your potential returns, but also the likely swings in your portfolio.  Pick an investment mix that aligns with your goals, timeframe, and financial situation that you can stick with despite market volatility.  Choose an investment mix you are comfortable with.

  1.  Focus on time in the market – not trying to time the market

It can be tempting to try to sell out of stocks to avoid downturns, but it’s hard to time it right.  If you sell and are still on the sidelines during a recovery, it can be difficult to catch up.  Missing even a few of the best days in the market can significantly undermine your performance.  Missing out on the best days can be costly.

  1. Invest consistently, even in bad times.

Some of the best times to buy stocks have been when things seemed the worst.  Consistent investing can give you the discipline to buy stocks when they are at their cheapest.  Consider setting up an automatic investment plan.  Investing during recessions has historically led to strong investment results.

  1. Consult with your financial advisor

Down markets may be a good time to meet with your advisor to answer your questions, discuss adjusting your investment mix or examine opportunities when prices are low.

Source:  Fidelity.com

A BRANCH OF NATIONAL SECURITIES CORPORATION · 59 FINLAY ROAD, PO BOX 2806, ORLEANS, MA  02653

Tel:  (508) 240-0320      FAX:  (508) 240-2309    www.brimmerfinancial.com

Securities offered through National Securities Corporation, member FINRA/SIPC.  Advisory services offered through National Asset Management, an SEC registered investment advisor.  Fixed Insurance Products offered through National Insurance Corporation.  Investing involves risk including loss of principal. The information provided is not directed at any investor or category of investors and is provided solely as general information about products and services or to otherwise provide general investment education. None of the information provided should be regarded as a suggestion to engage in or refrain from any investment-related course of action as neither National Securities nor its affiliates are undertaking to provide you with investment advice or recommendations of any kind.  Past performance does not guarantee future results.

Comments and Opinions

The First Quarter, 2022 brought major pressures on both the US and Global stages. Although we began to move forward in the recovery from the last two years of the pandemic, rising inflation, rising interest rates, and supply chain issues impacted consumers and the stock markets. In March, Russia’s invasion of Ukraine brought humanitarian crises, global economic and political upheaval, and stock market uncertainty.

According to the US Bureau of Labor Statistics, as of March, 2022, inflation rose 8.5% over the last 12 months – a 40 year high. Gas, food, and housing were the biggest inflationary drivers putting pressure on consumers. The root causes of this inflation stem from historic government spending, continuing supply chain disruptions, and strong consumer demand.

The uncertainty of the above situations impacts our economy and the stock markets. Markets do not like uncertainty and volatility is the result. U.S. stocks recorded the first quarterly decline since the onset of the Covid pandemic in the first quarter of 2022. Source: NASDAQ. The US Gross Domestic Product was down 1.4% a reversal from an annual 6.9% growth rate in the fourth quarter of 2021. Source: Wall Street Journal

Although the US faces challenges and there is talk of recession, some believe the economy remains strong and can return to modest growth going forward. Consumer spending is strong as Covid-19 restrictions are being lifted. According to Morningstar, the Federal Reserve’s shift to tighter monetary policy increases confidence that high inflation will be tamed. Markets are now pricing in an increase in the federal-funds rate to 2.5% by the end of 2022, a much more aggressive pace of tightening than previously expected. This will come at the cost of slightly slower near-term GDP growth, but they don’t believe a recession is on the horizon.

Source: Morningstar, Quarter End Insights, April 1, 2022

As we watch and wait in a volatile market environment investors should review their portfolio’s asset allocation, risk suitability and risk tolerance to make sure their plan is on track to meet their financial goals.

Market Volatility: Check Your Emotions at the Door.”

The following article is taken from the Investor Insights page on the Financial Industry Regulatory Authority’s website:

https://www.finra.org/investors/insights/market-volatiliy-check-emotions-door

Volatile markets can inspire feelings of fear and anxiety among investors. The market surges and sags that we experience can be for any number of reasons—trade policy concerns, tax breaks, inflation fears, economic optimism, concern of a global pandemic or a recession watch. The stock market reacts, and sometimes so do we. It raises the question: what should you do in times of volatile markets? In many situations, the answer is sit tight, and take the long view.

“One enduring truth about stock markets is that they go up, and they go down—and the steeper the rise or the fall, the more tempting it can be to derail a long-term strategy with a snap decision,” said Gerri Walsh, FINRA’s Senior Vice President of Investor Education. “Especially when markets fall sharply, we tend to react on impulse. Before that becomes your reaction to market volatility, focus first on your goals and your investment timeframe.”

Investors who need short-term liquidity—for example, if you plan to make a large purchase such as a house or a car, or you know a tuition bill is about to come due—will likely want to pursue a different path than investors who do not need cash right away. All else being equal, the latter group might be better able to stomach volatility in the short term. But any investor who cannot bear the thought of—or cannot afford—locking in losses in times of volatility may want to explore less volatile alternatives to help secure their portfolio’s value.

“Talk to your investment professional,” said Walsh. “And consider the broader consequences. How does any action you choose to take in the moment impact your portfolio in the future? What are the tax consequences? Before you make any decisions regarding your investments, it’s important that you keep your emotions in check and understand what is going on.” Whether any given day’s drop reflects a market correction, an anomaly or the beginning of a bear market can take time to figure out – and is outside the control of any one investor. So control what you can – and focus on key investing concepts such as staying diversified and rebalancing to stay aligned with your goals.

The performance quoted herein represents past performance. Past performance does not guarantee future results. Investors cannot invest directly in an Index and performance represents gross returns without net fees if any.

A BRANCH OF NATIONAL SECURITIES CORPORATION · 59 FINLAY ROAD, PO BOX 2806, ORLEANS, MA  02653

Tel:  (508) 240-0320      FAX:  (508) 240-2309    www.brimmerfinancial.com

Securities offered through National Securities Corporation, member FINRA/SIPC.  Advisory services offered through National Asset Management, an SEC registered investment advisor.  Fixed Insurance Products offered through National Insurance Corporation.  Investing involves risk including loss of principal. The information provided is not directed at any investor or category of investors and is provided solely as general information about products and services or to otherwise provide general investment education. None of the information provided should be regarded as a suggestion to engage in or refrain from any investment-related course of action as neither National Securities nor its affiliates are undertaking to provide you with investment advice or recommendations of any kind.

Comments and Opinions

The Third Quarter of 2021 began with optimism, fueled by increasing vaccination rates, employees returning to work, and schools and businesses re-opening.  The stock markets were strong in the first half of the quarter – reaching all-time highs.  However, the markets ended the quarter on a pessimistic note.  A surge in covid-19 Delta variant cases, increasing supply chain problems with warnings of possible shortages of goods for the holiday season, and continuing inflation slowed economic growth and erased earlier market gains. 

The Dow Jones Industrial Average ended the quarter down 1.5%, the Nasdaq Composite was down 0.2% and the S&P 500 closed up 0.6%.  However, each of these indices remain positive year-to-date with the DJIA up 12.1%, the S&P 500 up 15.9%, and the Nasdaq up 12.7%. 

Source: nasdaq.com 

Historically, the month of September has produced weak stock market returns. Some analysts believe that the negative “September Effect” on markets can be attributed to seasonal behavioral bias as investors change their portfolios at the end of summer to cash in. Another reason could be that most mutual funds cash in their holdings to harvest tax losses. There is a statistical case for the September effect depending on the period analyzed, but much of the theory is anecdotal. 

Source:  Investopedia September 09, 2021

In the Fourth Quarter, markets will be focused on the continued progress of reopening, the Federal Reserve’s expected tightening of monetary policy, inflation, and future tax policy to name a few issues.  Year-end is a good time to review your portfolios, rebalance if necessary, and consult with your tax professional regarding any losses in your non-retirement accounts.  Please call our office with any questions or concerns.

Estate Planning

October 18th to the 24th, 2021 was designated National Estate Planning Awareness Week.  Estate planning is an often overlooked element of financial wellness. It is estimated that over half of Americans – 56% – do not have an up-to-date estate plan. Source:  www.naepc.org 

Estate planning is not just a tool for wealthy individuals and families.   Whether your finances are complicated or more simple everyone should have a plan that determines the way their assets are to be distributed after their death. 

A basic estate plan should include: 

  1. Will or Trust
  2. Health Care Proxy on file with your health professionals
  3. Durable Power of Attorney
  4. Beneficiary Designations for your retirement accounts
  5. Transfer on Death registrations for your non-retirement accounts
  6. Appointment of a Personal Representative or Executor/Executrix to administer your estate.
  7. Gifting Plan if applicable

These basic building blocks of an estate plan should be periodically reviewed and updated if necessary.  Your Personal Representative should have access to the necessary information.  A well-thought-out plan can avoid family disputes, litigation, excess estate taxes, and court costs.  Discussing the plan and communicating your wishes to your family may serve to avoid any misunderstandings in the future.

The performance quoted herein represents past performance. Past performance does not guarantee future results. Investors cannot invest directly in an Index and performance represents gross returns without net fees if any.

A BRANCH OF NATIONAL SECURITIES CORPORATION · 59 FINLAY ROAD, PO BOX 2806, ORLEANS, MA  02653

Tel:  (508) 240-0320      FAX:  (508) 240-2309    www.brimmerfinancial.com

Securities offered through National Securities Corporation, member FINRA/SIPC.  Advisory services offered through National Asset Management, an SEC registered investment advisor.  Fixed Insurance Products offered through National Insurance Corporation.  Investing involves risk including loss of principal. The information provided is not directed at any investor or category of investors and is provided solely as general information about products and services or to otherwise provide general investment education. None of the information provided should be regarded as a suggestion to engage in or refrain from any investment-related course of action as neither National Securities nor its affiliates are undertaking to provide you with investment advice or recommendations of any kind.

Comments & Opinions

A year ago at the end of the Second Quarter of 2020, we were in an economic and social lockdown brought on by the Covid-19 pandemic.  The US and most of the world were under severe restrictions.  It’s been a long year.  Now, due to the availability of Covid-19 vaccines and behavioral changes in society, we have witnessed strong rebounds in the US and global economies along with lessening of social restrictions. 

US equity benchmarks closed the first half of 2021 at or near record highs as the economy reopened and more people returned to work.  The S&P 500 ended the first half of the year up 15.2%, the DJIA was up 13.8%, and the NASDAQ Composite finished the first half of the year up 12.9%.  Historic fiscal and monetary stimulus has provided a consistent tailwind since the Spring of 2020, and there is little evidence those efforts will be removed anytime soon. Source:  NASDAQ.com July 1, 2021

Going forward, we believe the main challenges for the economic recovery may be the spike in the highly contagious Covid-19 Delta variant and the possibility of new restrictions, continuing inflation for products and services across the board, and the Federal Reserve’s response to these inflationary pressures.  The question of whether price increases are “transitory” or long-term is yet to be seen. 

Fed Chairman Powell stated on July 27th, that inflation will likely remain elevated in the coming months before moderating.  He also said the Fed will not raise rates or begin tapering the purchase of Treasury and mortgage bonds that provide stimulus to the economy until they see “substantial further progress” toward their goal of low unemployment and stable inflation. Source:  Wall Street Journal, 07/28/2021

We recommend a review of your investment portfolio and financial plan to determine if any adjustments are needed for your short-term and long-term goals.  Please call our office to schedule a meeting at 508-240-0320.

INFLATION

What, Why, When?

Inflation can be defined as the rise in prices for goods and services and the decline in the purchasing power of money.  Three of the main reasons that contribute to inflation are an increase in the money supply, the resulting decline in the value of the Dollar, and a disruption in the supply chain for goods and services.  All three of these have occurred since the beginning stages of the pandemic.

The Federal government and the Federal Reserve rapidly infused the economy with stimulus money.  Trillions of dollars were printed to provide individuals and businesses with money to keep the economy functioning and the Federal Reserve began purchasing assets in order to inject liquidity into the economy.

A large, rapid increase in the money supply reduces the value of each dollar and therefore, the cost of goods goes up. Companies pay more for their supplies and they pass the cost on to the consumer.

Production of goods slowed during the pandemic due to employees becoming ill and wide-reaching economic shutdowns.   Supply chains for imports, especially from China, were disrupted and this significantly impacted the price and availability of goods.  

Too much money chasing too few goods = Inflation

A BRANCH OF NATIONAL SECURITIES CORPORATION · 59 FINLAY ROAD, PO BOX 2806, ORLEANS, MA  02653

Tel:  (508) 240-0320      FAX:  (508) 240-2309    www.brimmerfinancial.com

Securities offered through National Securities Corporation, member FINRA/SIPC.  Advisory services offered through National Asset Management, an SEC registered investment advisor.  Fixed Insurance Products offered through National Insurance Corporation.  Investing involves risk including loss of principal. The information provided is not directed at any investor or category of investors and is provided solely as general information about products and services or to otherwise provide general investment education. None of the information provided should be regarded as a suggestion to engage in or refrain from any investment-related course of action as neither National Securities nor its affiliates are undertaking to provide you with investment advice or recommendations of any kind.