Market Volatility and Your Financial Plan

As many of you have undoubtedly noticed, the stock market has dropped in the last few weeks as we’ve seen signs of a weakening economy and strained consumer.  We understand that this volatility can be scary, but this is a normal part of the investing process.

We wanted to provide some bullets for you to provide some sense of calm during the storm…

First, it’s important to acknowledge that the economy has grown significantly in the past five years.  In 2019, the entire GDP of the US was roughly 21 trillion dollars.  As of 2023, the overall economy has grown to nearly 28 trillion and has continued to expand from there. Most of this growth is not in luxury goods and vacations but instead in humans living their day-to-day lives and continuing to consume goods with an increasing population and rising prices.

Additionally, the Fed has moved interest rates significantly higher in the past few years.  While this created stress along the way, it metaphorically “loaded the gun” to be able to reduce rates to stimulate the economy as needed.  Today, the Fed has rates near 5.5%, putting a lot of pressure on the economy.  There is a lot of talk now about the potential for an “emergency cut” where the Fed could come out and make a surprise announcement about cutting rates.   There is an adage that the Fed raises rates on an “escalator” and drops them on an “elevator”, which we could see in this circumstance as well.

Historically speaking, market downs are temporary, while the ups are permanent. It is important to remember that the market is not a casino or a zero-sum game.  Investing in the global economy is critical over time as the supply of money and overall consumption continues to increase as it has through all time.

Overall, we want to be here to support you if you have concerns.  For our clients, we’ve built financial plans designed to address and prepare for the long-term of their plans.  Revisiting the plan in these periods can be a healthy exercise.

Please reach out if you want help updating or putting together your plan. We would love to spend some time making sure you feel confident about your financial future. 

Thanks For Reading! We Hope To See You Again!

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Advisory services offered through National Wealth Management Group, LLC, a Registered Investment Adviser. This information is intended for educational purposes and is not intended as a recommendation to buy or sell securities. Investing involves risk. Before investing, you should consult with a financial advisor to determine how a specific investment strategy fits your personal goals and objectives.