Good afternoon,
Well, we got some news last week. Inflation news. Not surprising to WMR regulars, inflation is here and it’s high, the highest we’ve had in 40 years. And it’s got people worried. Rightly so.
Inflation means that everything you need to buy costs more. Which of course leaves you with less money in your wallet. That hurts.
Markets reacted as we might have expected, they lost ground. Both at the end of last week and the beginning of this week. Which brings us near bear market territory for the year.
https://www.cnbc.com/2022/06/09/stock-market-news-open-to-close.html
This report also points out the consumer sentiment is low. No kidding. Feeling poorer as the value of your investments go down while your expenses simultaneously increase is bound to make you sad.
Does any of this mean that we’re in a recession or that one is on the horizon? Maybe. But it seems more like the press is trying to talk us into one rather than there really being one, at least right now. Yes, things cost more, yes rates are going up, yes, the supply chain is down, yes it seems like the world is on fire, but that’s the way it always seems. Many of the business owners I know in my area are in search of employees. Every restaurant or shop I’ve visited in the last 2 years has help wanted signs in the window. Fast food franchises are advertising up to $18/hour starting wages. Those are not usually signs of a slowing economy. #mathwins. Then why would the press want to scare us? Why would they repeatedly remind us how bad everything is or will get? Because bad news sells. Bad news makes you watch longer or stay on the website longer or click on other bad news. We love dirty laundry. It does bother me that all the talking points seem to aim us at a recession. The other thing that bothers me is that many of the issues the country is facing appear to have been influenced by government policies. Whether in our favor or not, the government and the press seem to think that more government policies could help. That doesn’t make sense.
Here are some things we can do in case we feel like a recession is coming. First, try our best not to participate. Given your circumstances, which may or may not be completely feasible, but we can try. Choose to ignore all the noise, put your head down and continue to do your thing. Next, reduce your spending as much as possible. Evaluate your mandatory v. discretionary expenses and make some choices. Third, try to save more if you can. And invest those savings. Stocks are on sale, if your strategy includes adding equities and growth to your portfolio, now is a good time. And speaking of investments, now it a good time to reevaluate your portfolios. Have the recent market movements thrown off your allocation? Do you need to rebalance? Are there any tax reductions strategies available now that aren’t available when markets are up? Do you need to update any of the calculations you’ve made with respect to your financial plan? And while you’re at it, might as well review estate documents and beneficiary designations as well.
All we’re doing with these maneuvers is controlling what we can. We cannot control the markets or the Fed or the press or lots of other things, but we can control our reactions to them. “Between stimulus and response there is a space. In that space is our power to choose our response. In our response lies our growth and our freedom.” - Viktor E. Frankl.
This week’s crypto commentary, if I were to write one, which I’m not really supposed to do because my firm does not allow me to transact crypto currency, would be something along these lines.
Crypto assets are not immune to the market selloff. They’ve had a pretty rough first half of 2022. Turns out that when lots of things fall in value, so do lots of other things. Which isn’t really surprising since crypto is has generally been known for its volatility.
Be careful out there in crypto land.
On to non-correlated news, cue Wille Nelson, the WMR has been on the road again. https://www.youtube.com/watch?v=dBN86y30Ufc
This week I’ve been to Annapolis MD and Cape May NJ. Why? Because why not.
Annapolis is a charming town and very walkable. Lots of local shops and restaurants and such. I toured the US Naval Academy, which was cool. They accept about 1000 new midshipmen per year, who must all study 2 years of STEM courses and participate in one of the 35 division one varsity sports or one of the dozens of other intramural or club sports. If accepted there, students don’t pay tuition, we taxpayers cover that, and there is a 90% graduation rate within 4 years. Once graduated, students are then required to serve 5 years in either the Navy or Marines. If you know of an athletic high school student with a math aptitude, this might be a good spot for them.
This is a famous Annapolis deli, home of the 6 lb. milkshake. Listed on the menu for $35, if you finish it, you get your name and picture on the wall. No, I did not order one. Find them here, https://www.chickandruths.com/
