October 2023 Market Update
- jbrowning08
- Oct 4, 2023
- 5 min read
October 2023 Market Update
Guardian Rock Wealth™
What’s In The Economic Mix?
Can you remember the last time you tasted the best cooking or baking? Maybe it was your spouse, yourself, Mama’s cook’in
Christine, my wife, can make about anything in the kitchen. She tells me it is all about adding the right ingredients in the right amounts at the right time. Even the temperature and time in the oven can significantly affect the outcome. Get too much of a good ingredient, and it ruins the product. Just enough of an element that tastes bad on its own can make things taste amazing!
Last month, we talked about “The Best Thing Since Sliced Bread.”
This month, let’s look at the ingredients of making that proverbial economic bread and how it might taste for your portfolio and retirement plan. It is important to note that the Bulls and the Bears have great points, and intelligent people are firmly on both sides of the debate. The key is how to position yourself to profit no matter what happens, and that depends upon your personal situation, which only you and your financial advisor know about.
The Bearish Crowd
The Bullish Crowd
Positioning Yourself to Profit
The Bearish Crowd:
The Bears are looking at the wars and rumors of wars—the global geopolitical mess and quite the political circus at home. The bears point out that while “core” and “super core” inflation has decreased, the price of essential goods such as fuel, food, and rent remain stubbornly higher.
The bears also point to many other factors, such as higher rates continuing to cause more commercial real estate defaults. Further sucking cash out of the system is the return of student loan payments this month, potentially reducing consumer spending and confidence. You don’t have to look far to find gloomy outlooks, especially for the next several months.
One of the key things to note here is that 2020 activities injected vast amounts of literal cash into the economic system, encouraging people to spend and generally driving prices up. The draining of the strategic oil reserve, the Build Back Better programs, and a few others during 2023 also injected funds into the system, albeit not direct cash to the consumer. Meanwhile, the FOMC (Federal Open Market Committee) increased interest rates more and higher than ever in American history (yes, even the Volker-led FOMC raised rates much less in relative terms.)
The very recent start to dis-inverting the yield curve is also bearish. Remember the issues caused in March as treasury collateral at several banks declined because of the rise in short-term rates? When rates continue to rise, small increases in rates on the longer end of the curve cause these bonds to decline many times more than the same move in shorter-term bonds. You can see why the bears are concerned.
History shows there is generally a significant lag between interest rates rising and the actual impact on the economy. The Bears are warning that this lag impact should start sometime in 2024.
The Bulls:
The bulls highlight the massive waves of innovation that continue to change our world in enormous, albeit unpredictable ways, raising productivity. Inflation is seen by many as being deflationary, leading the bulls to expect higher rates to be short-lived. Many bulls consider higher rates reasonable since we finally have bond returns arguably higher than inflation. Add in the fact that we have yet to see any markedly disturbing news on the employment front. When people work, they get paid, and at least here in America, they go shopping – which drives the economy.
The Bulls have significantly less going for them. However, I note two things.
The Bears may be taking a shorter-term view of the weight that should be attributed to the remarkable wave of innovation that is just beginning.
I learned to appreciate the ability of the American Consumer to do their job.
Positioning Yourself to Profit:
I fully understand both points of view and find myself leaning slightly in the bearish camp for the next 12 to 18 months. However, there are always ways to position yourself to profit by digging a little deeper into the analysis. Make strategic and tactical allocations, practice patience, and do not compare yourself to your neighbors or family members in entirely different situations.
Investing and preparing for the future when utilizing your personal paycheck protection program has changed dramatically. We often speak with people in retirement who are stuck with the old methods and, frankly, myths that are now unfortunately struggling to make ends meet.
If you would like to learn more about how to create your paycheck protection program so you are not worrying about running out of money or not being able to live your best life in retirement, reach out to us at the Contact Us section of Guardianrockwealth.com or by texting the word LIFE to 321-421-5213
This note is not investment guidance for you; it is information and opinion only.
Define your outcome and allow a skillful artisan to help you create it.
Please remember that this note is our opinion from a broad perspective based on over three decades of money management experience and is not personal investment advice.
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Talk soon,
John
Phone: (561-) 327-4646
John Browning, MBA, and CSA®
* Securities and investment advisory services are offered through Guardian Rock Wealth Investment Mgmt. Inc.™™ (GRWIM). GRWIM is a wholly-owned subsidiary of Guardian Rock™ LLC. Neither of these entities provides tax or legal advice. Guardian Rock™ has offices in Palm Springs (West Palm Beach), Florida, Pinehurst, North Carolina, and Lisle, IL, and services individuals across the United States.
Nothing in this communication should be construed as personal investment advice, and past performance does not guarantee future results. Investing is only appropriate for some. There is a risk of loss associated with investing in the markets. No representation or implication is 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 an experienced, qualified investment advisor before making any investment decisions and/or trying to implement any strategies and tactics we may discuss in any of our publications.
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