A look at investor behavior
This week, the news cycle has remained pretty dark, regardless of your news source. But you don’t need me to tell you. The evacuation process in Afghanistan, the hurricane and flooding in the northeast, the raging pandemic with the death toll in the United States surpassing 630,000, the extremely difficult recovery from the earthquake in Haiti and the endless fires burning in the west – to name a few hot topics. So what is the market doing in the United States? He sets another all-time high!
Your investment account – to the extent that you have exposed yourself to opportunities in the stock market have done well. We are reminded, once again, that investors (you and me) ultimately “vote” our portfolios. Markets are “examining” the turbulence of the current news cycle to see the possibilities for future profits. For better or worse, we don’t react economically as market players until disaster strikes us.
To add a little substance to the discussion, there really are some reasonably valid explanations for why the market is reacting the way it does. For example, the pace of vaccinations has actually increased. This week, the FDA lifted the Pfizer vaccine’s “emergency use” status – replacing it with an “approval” rating. Investors now have every reason to believe that many of the unvaccinated people who were “on the fence” will feel more confident and stand a chance. Additionally, the FDA statement prompted many companies / governments to get vaccinated. Indications of a spike in positive Covid tests in the United States have led to what many call “positive covid sentiment” that investors find favorable.
Not to get into politics, but to observe the political impact on your investment account, consider the recent drop in President Biden’s approval rating. No one seems to doubt the botched nature of the withdrawal from Afghanistan and the president is – at least currently – paying the price. So what impact does this have on your personal financial well-being? This has the potential (perhaps the likelihood) of endangering the Biden agenda, including tax increases and monumental government spending. Add to that an increased possibility that the House of Representatives and Senate will become Republicans in the midterm elections next year and many investors are increasingly optimistic about the market’s earning opportunities. Of course, this week the $ 3.5 trillion budget resolution was passed by the House and Senate – although that just means committees can start drafting their sections of the bill.
What you might not know but worth pointing out is that August is the cruelest month. This is not only true for the heat in Louisiana, but also for the presidents. This is when their approval ratings tend to take a hit, especially during their first term. The promises made to get elected usually run up against the inevitable real-world hurdles in the eighth month of any administration. The debacle in Afghanistan is a huge current catalyst for approval ratings, but political memory is short. Stay tuned to see how the story reflects on this very fluid situation – and its potential impact on your investment account.
Let me end this week with what I find to be an interesting trend. We are all worried when we see vacant commercial real estate properties everywhere. This is especially true if we own – or are invested in – one or more shopping centers. The explosion of online shopping (Amazon, etc.) indeed seems to have been the death of shopping centers. If that wasn’t enough, the pandemic has piled up. Not so fast. The inability of online vendors to deliver consumer goods to your doorstep has created a huge problem. Add to this the awareness of consumers that they really want to touch, smell, smell certain products (especially clothing and furniture). Solution – guys online are moving to brick and mortar as delivery points for a lot of consumer goods. Watch carefully as we continue to observe endless changes in our economic landscape.
The opinions expressed in this document are for general information only and are not intended to provide specific advice or recommendations to an individual. To determine which investment (s) might be right for you, consult your financial advisor before investing. The economic forecasts set forth in the presentation may not develop as expected and there can be no assurance that the strategies promoted will be successful. The referenced performances are historical and do not guarantee future results. Not all indices are managed and cannot be invested directly. Investing involves risks, including loss of capital.
RFG Advisory and its investment representatives do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only and is not intended to provide, and should not be relied upon, for tax, legal or accounting advice. Please consult your own tax, legal and accounting professional for advice on these matters.
Visit us at www.williamsfa.com. Tommy Williams is a Professional CERTIFIED FINANCIAL PLANNER ™ with Williams Financial Advisors, LLC. Titles offered by representatives registered via Private Client Services, member of FINRA / SIPC. Advisory products and services offered by investment advisory representatives through RFG Advisory, a registered investment adviser. RFG Advisory, Williams Financial Advisors, LLC and Private Client Services are unaffiliated entities. The branch is located at 6425 Youree Drive, Suite 180, Shreveport, LA 71105.