“We are at a pretty reasonable place to be a buyer – the economy is not broken.” – Ryan O’Connell
Election season is finally over.
Ryan O’Connell started the Q4 BTWM Virtual Lunch Webinar with a discussion on the impact midterm elections will have on the market, which appears to be minimal. Generally speaking, the market likes gridlock. The market benefits from gridlock because it protects us from what some believe to be rogue policies, which put the future of major companies in doubt. Because the market has confidence corporate tax rates will not increase, stocks should benefit.
What impacts the market more than elections is monetary policy and what the FED is doing. The day before the webinar, the Federal Reserve raised the federal funds rate 75 basis points. This marks just the fifth time in the last 30 years this has happened, and the fourth time in a row. With inflation around 6%, the FED is trying to fight inflation with this increase to get it back around 2%. “We are past peak inflation; there are clear indications of that,” says Ryan. Ryan believes that rates will remain high until next year at the earliest before there is a rate cut.
A recession is imminent, and we’re likely to see reduced corporate spending in advertising and marketing first. The good news is that this isn’t an asset bubble like in the past. Companies are still forecasting better bottom lines, which gives us a lot of hope for the future.
Controlling What We Can Control
“What’s important now? To evaluate the past, focus on the future, and tell you what you have to do in the present.” – Lou Holtz
There’s no doubt about it, we’re currently in a valley. The market is down, and all signs point to a recession.
So, what can we do about it?
We can control three things:
- Our Mindset & Attitude
Play close attention to the information and news you’re consuming during the upcoming recession. By keeping your mindset focused on your overall goals and not temporary losses, you can have a more balanced and positive approach to your retirement account.
- Cash Flow
Despite temporary losses in principle, you can put your portfolio in a winning position in terms of cash flow.
- Investing in High Quality Companies
Earnings remain strong. Find and rely on high-quality companies that you believe will outlast the recession.
The webinar concluded with a discussion about when and why Ryan changes what he’s watching on his stock watchlist. Stay tuned for a recap of that discussion and details on the Q1 BTWM Virtual Lunch Webinar in 2023!
Have questions about the market or your retirement-related goals? You can always reach me at ryan.oconnell@bloomingtreewm.com.
*This is not financial advice.