One of the many benefits of working with a team of advisors is the ability to share and compare viewpoints and thoughts on the markets and discuss the current events to help each other gain a better understanding of what is happening in the world around us. This is even more valuable during volatile times when we all feel a bit more anxious about the markets. Brian Krawiec has been an advisor with Potomac Financial Group since 2007 and I thought I would share some of his recent commentary below on the markets in this month’s newsletter.
Thoughts from Brian Krawiec
While we may be enjoying the longer days and the nicer spring weather, the financial markets don’t seem to be as enthusiastic. It’s continued to be a rocky stretch for almost all areas of investments, stocks and bonds alike.
In trying to make sense of it all, it’s human nature to want to compare today with the last time things weren’t going our way. And when it comes to investments, that was the COVID crash of early 2020. However, it’s hard to make many meaningful connections with that past bear market.
Then, the reasons for the downturn were more obvious – we forcibly shut down the country to try and control the spread of the virus. There was no question that the economy would be forced into recession as a result, and many businesses would fall on especially tough times. And, as difficult as it was for us all financially, that almost didn’t matter – many of us were (understandably) focused on the health of ourselves and our loved ones. After all, as far as immediate priorities go, not much else matters if we’re sick or having health troubles!
This time around, the reasons for the financial market turbulence aren’t as “simple” or easy to understand. We’re all feeling the inflation crunch at checkout lines and the gas pump, but there’s no nationwide shutdown and the economy itself remains relatively strong right now. Moreover, both stocks and bonds are suffering (bonds in a historic fashion not seen for decades).
It’s often said that the financial markets tend to be forward-looking, and stock/bond price movements adjust to what market participants think might be coming down the road. And what’s coming down the road is a standoff with inflation – a US Federal Reserve that will be increasing interest rates and taking away stimulus from the economy throughout the rest of the year in an attempt to get inflation under control.
So, the big question that’s underlying all of our current gloom is whether or not the Fed will be able to navigate the tricky task of cooling inflation without cooling the economy. The margin for error feels slim, and a mistake could have significant consequences for everyone – investors, employees, businesses, and the country as a whole – if the economy slows down too much.
You can learn more about the Federal Reserve, the task in front of it, and how financial markets have behaved during past periods of rising interest rates in this spring’s Investment Strategy Quarterly, found here.
As the market volatility has picked up again as we approach the end of April, we also wanted to share Raymond James’ Thoughts On The Market which is a summarized update from the experts at Raymond James including Chief Investment Officer, Larry Adam. This update is from April 25th and we think you’ll find their commentary on the markets both timely and helpful.
Perhaps an article or two will spark some questions or concerns about your investments or your financial plan – please don’t hesitate to reach out so that we can discuss them further.
In closing, we thought it would be a good change of pace to share some recent photos from our team. As we’re finally transitioning to spring weather here in Maryland, we’re all very excited to get outside and enjoy the warmer temps!
Todd’s oldest son, Charlie, and youngest son, Graham, playing baseball
Ryan and Sara recently went on their first ski trip to Breckenridge and had the opportunity to spend some time with her brother who lives in Denver
Todd M. Wike, CFP®
CERTIFIED FINANCIAL PLANNER™
Managing Partner, Potomac Financial Group
2022 RJFS Chairman’s Council Member*