“There are never a good war, or a bad peace”
Benjamin Franklin
Just under 90 years ago, Franklin D. Roosevelt observed that we have nothing to fear except fear itself. You can always learn from history, even if nothing is ever exactly the same. As investors that means volatility will be our foe on a regular basis, but do not worry about it being permanent. Worry more about worrying too much.
As expected, the Federal Reserve raised short-term rates by one quarter of a percentage point (25 basis points) this week, the first rate hike since the end of 2018. Even more important, the Fed signaled a new level of hawkishness in terms of future rate hikes as well as Quantitative tightening. (ABOUT TIME)
“This doesn’t mean it’s time to get bearish on equities. Economic growth continues, corporate profits are very high, and long-term interest rates, although they’ve moved up recently, are still low enough to make equities relatively attractive. In a better world, the Fed would operate in the background and investors could ignore it. Unfortunately, for the time being, investors are going to have to pay attention to the direction and pace of changes to monetary policy.” (Brian Wesbury-First Trust advisors)
Baby Boomers Retire- Over 47.4 million Americans quit/retired from their full time jobs in 2021, the highest annual number recorded in the United States based on data tracked since 2001. (Source: Department of Labor)
“Inflation continues to be a problem. The CPI was up 7% last year and the year ago comparison should peak near 9% sometime in the next month or so. The Fed is well behind the curve and has its work cut out for it.” (Brian Wesbury, First Trust)
The FED downgraded GDP to 2.8% for 2022 and kept 2023 at 3%. World growth for 2022 is forecast to grow at 3.9% and 2.3% in 2023. (Federal Reserve)
“Earnings growth in 2021 topped 45% for the full year, this was compared to the 2020 earnings decline. Looking ahead, Factset expects earnings to rise 4-5% in the first half of 2022. The expected earnings growth rate for the S&P is 4.8% in the first quarter and estimated revenue growth of 10%. The full year 2022 earnings growth is expect to top 9.1% and revenue growth of 8.9% (Factset Earnings Insight)
I believe we are still in a Secular Bull Market with many years left in its path. If that changes, we will adjust. As I’ve emphasized in our prior conversations, stocks are in a long term upward trend, and that upward trend is incorporated into your financial plan, but stocks don’t rise in a straight line. Be prepared for setbacks and use those as opportunities to add to equities when appropriate.
As always, I’m honored and humbled that you have given me the opportunity to serve as your financial advisor. I’m here to assist you and to answer any questions you might have in regards to financial planning, the markets or walk through any issue that concerns you. As always, thank you for the relationship and trust.
Harry S. Williamson, WMS
First Vice President, Investments
Financial Advisor
Any opinions are those of Harry Williamson and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Past performance does not guarantee future results. Future investment performance cannot be guaranteed, investment yields will fluctuate with market conditions.
The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S .stock market.
Prior to making an investment decision, please consult with your financial advisor about your individual situation.
