Ignore the Distractions
Beyond last month’s synopsis regarding how the markets are reacting to Washington, we’ll stay out of the political weeds and let you form your own opinions. The current environment in Washington is generating an enormous amount of political uncertainty. But, political and international uncertainty has yet to generate economic uncertainty. Hence—and this is important—it really is about the economy.
We were told by the pundits that political gridlock and any unraveling of Trump’s tax cut and infrastructure agenda would pound stocks. It has not yet unraveled, but bold economic changes from Washington are at risk. Why? We think we are beginning to see the passing of the baton. An investor-friendly agenda in the post-election climate that fueled market gains has been replaced by stronger economic fundamentals. S&P 500 profits in the first quarter came in at the fastest pace since the third quarter of 2011, according to Thomson Reuters. And forecasts for the year have been relatively upbeat.
Simply put, the fundamentals “trump” the negative headlines, whether those headlines originate in the U.S. or overseas. The longer-term focus of the markets has always been the economic fundamentals. We believe that focus has not changed. Unexpected and alarming events may create short-term volatility, but they rarely create long-lasting impact, unless there is a significant effect on the economy.
Financial Literacy
We recently came across a definition of financial literacy that sums up the term well. To paraphrase: “It refers to the set of skills and knowledge that allows an individual to make informed and effective decisions with all of their financial resources.”
How do you manage money? How does one come up with financial goals and a plan to reach those financial goals? How do we make effective decisions with our financial resources? These are easy questions that don’t command easy answers. You see, the financial arena is much more complex than it was 50 years ago. There is a downside to the proliferation of choices we have today. It adds a layer of complexity, which creates confusion. Many people don’t know where to begin. Many fall into paralysis by analysis.
One of the goals in our practice is to educate investors. We know we cover various topics in our meetings, but we’ve learned that some folks feel uncomfortable about asking questions they perceive as too simple. Don’t we all? Please let us say this – there are no bad questions. We want you to be comfortable with what we recommend. We understand that you reach out to us for assistance with your finances, and we take that responsibility very seriously.
While the financial plans we advocate encompass basic long-term principles, we do not take a cookie-cutter approach. Instead, we tailor our advice to your unique situation. Every situation is unique, but there are fundamental financial principles that guide our recommendations.
Assisting you in pursuit of your financial goals and shedding light on financial complexities provides our team with an enormous amount of satisfaction. Financial literacy is just one of the avenues that will help place you on the road to reaching your goals and dreams.
Our job is to be your financial advisor and financial confidant. That is where we focus our energy. We’d be happy to entertain any questions you may have about your portfolio, your financial plan, and how we believe various events of the day may impact your investments. Finally, let me repeat, there are no bad questions. What we don’t know can hurt us. In addition, financial ignorance can be extremely costly.
Let’s talk if you have questions. That’s what we’re here for. Increasing your financial literacy, knowing what you own and why you own it, and growing your understanding of the economy and markets will inoculate you from adverse reactions to market distractions.
But let’s stick to your financial roadmap unless you have significant changes to your lifetime financial goals and objectives. If so, let’s talk.