Skip to main content

INDEPENDENT FIDUCIARY FINANCIAL PLANNING | INVESTMENT MANAGEMENT | ESG INVESTING | ADVOCACY INVESTING | ILLINOIS | HAWAII | COLORADO | NORTH CAROLINA

March 2021 Economic Update

I have recently been revisiting the book "Extraordinary Popular Delusions & the Madness of Crowds' by Charles Macky. While I realize some of his research methods have been questioned, there is little doubt that many of his stories did play out, and similar situations do today as well. 
A common delusion shared by many analysts is that the market is entirely driven by quantitative fundamentals. Unfortunately for some of these analysts who neglect the human element, the market can stay irrational much longer than they can stay solvent. Chris Davis of Advisors Magazine wrote a feature article about a year ago called Respecting the Role of Emotion in Investing that seems just as pertinent now as it did when he interviewed me then.

With all the noise in the markets today, we respect the role of emotions in investing while not being overcome by them. If we can do that, we will position ourselves to profit.  
  • Stimulus Induced Consumer Spending
  • The Potential New Face of Inflation
  • Market Speculation and "FOMO"


Stimulus Induced Consumer Spending
 
Throughout the years, I have often said that we should never underestimate the American consumer's ability to do their job. They are doing their job as retail sales continue to spike even in advance of another round of government stimulus. Continued consumer spending and manufacturing ramping back up are pushing production numbers higher. Mortgage refinancing continues to move forward even though mortgage rates have begun to move a bit higher. Amazingly the numbers are still telling us that online shopping still has a long way to go to catch up with old-fashioned going to the store, which bodes well for retailers working towards handling ever more online shopping demand. Even with the spending, the savings rates of consumers remain healthy as well. These things are positive signs for continued economic growth in the market and economy.  
 
The Potential New Face of Inflation
 
Along with all this good news comes the specter of potential inflation. We have seen the ten-year treasury bonds jump to a whopping 1.5% as the bond markets get skittish about where rates might go despite continued assurances from the Fed that they will keep rates low.  
There is an interesting new twist to inflation thinking. Traditionally inflation is expected when the money supply is inflated. This has certainly happened on a grand scale here in the U.S. and around the world as we deal with COVID. The twist comes in that we also see a potential new way to add money supply. While this idea can be debated, it is interesting that major companies have announced that they are looking to accept bitcoin as payment for goods and services. As this becomes a reality, it legitimizes electronic currency. The question outstanding at that point is; Does this count as adding money supply to the economy in addition to the government aid. Our opinion is that this is just another example of how the landscape is changing quickly and investors may need to adjust their thinking.   
 
Market Speculation and "FOMO"
 
Speaking of electronic currencies brings me to my next and point. Speculation has begun to reach epic proportions. As the Robinhood and Redditt crowd push certain securities and commodities' prices beyond any reasonable valuation, the temptation to follow becomes too great for many. There have been disastrous stories of financial ruin befalling those stricken by FOMO or Fear of Missing Out. Some of these stories end up in financial ruin as individuals lose even more than they started with without understanding how it happened. We generally only hear the stories of overnight millionaires rather than the destruction that more often happens. Even Lindsay Lohan advised that bitcoin was "going to the moon," and her followers followed. This market speculation and noise do not impact our long-term view and strategy. We are bullish on innovation and the right businesses over the longer term. 
 
We continue to strongly recommend a diversified portfolio tailored to your specific needs, which can only be accomplished with an in-depth conversation with a qualified licensed professional with the right experience. Please reach out to us with questions and we would be more than happy to speak with you. CLICK HERE to schedule some time to speak with me.


 

Phone: (312) 372-5000
Email: info@advocacyinvesting.com



John Browning, MBA and CSA®
CEO, Principal
As a certified financial adviser, Mr. Browning serves as the Chief Executive Officer for Guardian Rock LLC. In addition to providing oversight to the activities of the entire firm, Mr. Browning also leads the investment committee and is directly involved in client interaction and portfolio decisions impacting specifically customized portfolios. 
Mr. Browning is a graduate of Cedarville University in Ohio and later obtained his MBA from Northern IL University. John is a Certified Senior Advisor (CSA®) and holds multiple securities licenses including Series 6, 7, 63, 65, 24 among others. John brings over 30 years of Wall Street experience in analytical, economics and portfolio management background along with many years of leadership and strategy experience. John has served in various executive-level roles in the financial industry at large Wall Street firms including Morgan Stanley, Invesco, Guggenheim, and Nuveen where he obtained extensive experience managing billions in fixed income and equity.

Nothing in this communication should be construed as personal investment advice and past performance is no guarantee of future results.  Investing is not appropriate for everyone. There is a risk of loss associated with investing in the markets.  No representation or implication is being made that using any methodology or system will generate profits or ensure freedom from losses. Please remember that investing carries risk.  Guardian Rock Wealth LLC and its affiliates are fiduciary investment advisors.  Please consult with us or another experienced,  qualified investment advisor before making any investment decisions and/or trying to implement any of the strategies and tactics we may discuss in any of our publications.