Please Note:  Speak to your tax, legal or financial advisor for specific advice about your particular plans and situation.

In my previous post we discussed how politics, COVID-19 and the media has been pushing us around – taking an enormous emotional toll, making us feel out of control.

Let’s recap what we’ve discussed in the last post before we move onto steps 3 and 4 of Taking Back Control.

In Post 1 we:

1. Identified your fears

2. Determined what you can control

Today, we’ll discuss steps 3 and 4 below:

3. Do the work

4. Affirm, yes, you have control

Step Three: Do The Work

They say that “everyone without a plan ends up somewhere”.

I’ve never met someone who wanted to end up “somewhere”.

I’m not even sure it’s on the map.

Instead:

1. Determine where you stand, where you want to go and what you need to do to get there. = > Create a plan.

2. Implement your plan.

3. Update and evolve your plan yearly.

When you’ve built a plan and tested it against your fears, you’ve already prepared yourself for some potentially difficult scenarios.

And if the worst happens, you’ll be prepared, and most importantly, you’ll have determined how you will react in advance. When your friends & colleagues are surprised or even “a deer in the headlights”, you’ll know:

“If the stock markets crash 30%, I’m going to “do this” with my investments”.

“I have 5 years worth of retirement income “runway” so even if things go sideways for a while I’ll be fine”.

“If “this party” wins the election, I am prepared for that.”

“If Social Security is reduced by 20%, I know how I will adjust my retirement income plan.”

“If taxes rise, I’ll modify my withdrawal strategy to minimize taxes I pay.”

Pilots Take Control

Step Four: Affirm (and congratulate yourself) that, yes, you have control.

Yes, every plan needs updating, monitoring and optimization but, yes, if you have done the work, you have taken back control.

You have:

1. Identified your fears & concerns

2. Determined what you can control

3. Created and implemented a plan that controls what you can.

4. Affirmed you have control and have pledged to continue to do the work.

Congratulations, you have Taken Back Control.

Recommended read:  See how a Retirement Plan can help you take back control here…

Photo by Byron Sterk on Unsplash

Please Note:  Speak to your tax, legal or financial advisor for specific advice about your particular plans and situation.

​How can we possibly be talking about a stock market bubble when we have:

A contentious election coming up…

An economy that is reeling from the Coronavirus…

Tens of millions of people unemployed in the United States…

Social unrest like we haven’t seen in 50 years…

Deficit spending beyond expectations (even before the Coronavirus)…

And the US debt growing at an enormous rate.

The Fed is wondering where inflation is. 

Well it appears a portion of it is in the US stock market.

Portions of the market have risen significantly in the past few months, and while profits for many of these companies are expected to rise, many of them are simply priced to take over the world.  

Brand loyalty, sure.  Ahead of their peers, yes definitely.  The last of their kind?  Probably not.

Think Chevron vs. Exxon.    Think General Motors versus Ford.    Think Avis vs. Hertz. 

With the news cycle not in sync with the 2020’s stock market performance let’s use a few charts to put things in context.

Despite having more deaths and the highest death per capita of a developed country, the US Stock Market (BLUE) is outperforming most other global stock markets and has outperformed international markets collectively (RED).

​When we examine the US Stock Market as a whole, we see that three areas of the market have done particularly well and three areas of the markets have done particularly poorly. 

Add this all up and you end up with a stock market that has performed well enough even as significant segments have been left behind.  What’s particularly unusual is that the most expensive sectors have outperformed segments that have a higher expected long term rate of return.   

There’s a few theories of why this has happened but evidence suggests that smaller retail traders are buying positions in a variety of companies, bidding prices up.  

Or maybe this is the “inflation” the fed keeps talking about, but can’t find.  

Worth noting that some casinos are not open.

But the stock market is.

In contrast to a rising, bullish stock market, high-quality bonds have done quite well since their initial fall in March due to the Coronavirus.   Contradictory because high quality bonds are where people put money when they are nervous, and the fact that bonds are up so significantly this year means that investors may be nervous. (Or need somewhere other than the stock market to put money!)

High yield bonds, lower quality bonds that pay higher interest, appear to be priced more reasonably given high yield bonds come with more risk….they haven’t recovered as much as high-quality bonds. This this confirms that there is some fear in the bond markets, and it’s important to note that bond investors are generally considered to be significantly more sophisticated than (no offense to the new Robinhood or Etrade investor starting out) small retail investors. Bonds are boring and often owned by financial advisor’s clients, institutions and other organizations that have a long time frame and a desire for stability.

So there’s both fear being recognized in the bond market but also extreme bullishness in other parts of the stock market.

Conflicting signals.  Just like the media.

Note: If you are a client, don’t worry, we’ve considered all of this as we evolve your portfolio allocations in the context of your overall plan.

Thanks to Jean-Paule Rodrigue for sharing his Stages of a Bubble Graphic with the world

Please Note:  Speak to your tax, legal or financial advisor for specific advice about your particular plans and situation.