“I’ve been in the investment business for 35 years, and I tell you corrections are healthy. I am not worried about the markets. Over the long term if we put good tax policy in place, deregulation and energy security, the markets will do great.”
– Treasury Secretary Scott Bessent
March 2020 was the beginning of Covid, and we all watched the horrid events that took place over the next several months. We witnessed lockdowns, death, scarcity of products as well as the stock market experiencing a 30%+ plunge over a very short period. Many said we would never recover. Fast forward 5 years and we just witnessed many markets hit all-time highs. My point is that the markets are full of uncertainty today, anxiety amongst some investors is as high as it was in March of 2020. We now live in an environment full of change, a kind of vertigo moment where our economic policies seem to be spinning and changing in a rapid manner and I am here to say it should work out over time. Where we see the odds of a recession building, that is normal for markets. For markets to be efficient, they need to reflect business and economic cycles that happen over the course of time. A sort of recalibration. But do not let your emotions overwhelm your decisions when it comes to your financial plan and goals. Stick to the plan. We have great confidence in the health of the consumer, the economy and corporate earnings, even if we experience a healthy correction or slowdown in short-term growth. Cause it should only be short-term. Below is a chart that visually demonstrates many uneasy moments over a lengthy period of time and exemplifies that making emotional decisions based on the short-term is a foolish strategy.
And if you do not have a plan or are questioning your current plan, reach out to Banyan Wealth/Raymond James Red Bank, we would love to help.
Source: Bespoke.com
Pros and Cons:
Pros:
- AI Boom and the Fourth Industrial Revolution, a technology shift that will last for years to come
- Labor markets are healthy
- The consumer appears healthy
- Money Markets continue to hit all-time highs – Potential for future investment
Cons:
- Tarrifs and geopolitical risk
- Recession risk increasing
- The Volatility Index has been rising since December of 2024
- The Semiconductor Index has fallen more than 25% from its all-time high (AI has hit peak hype cycle, written about in Quarterly Insights, Edition 36)
Conclusion
Since the 1920s, or almost 100 years, there have been 22 bear markets and 17 recessions. Bear markets and recessions occur approximately 20% of the time, the other 80% is considered to be a bull market. The longer you stay invested, the better odds you have in achieving your financial plan and retirement goals. Over time the best strategy is to stick to your plan. Do not let the emotions of the minute or your political beliefs alter your financial future. Please consult with your financial advisor or reach out to us at BanyanWeath/Raymond James Red Bank.