Happy August to our friends in Hotzona and Hotvada, and all over this great nation! All I know is my office is 72 degrees year round. You know what else is still hot? The stock market, that’s what! We are in the longest economic expansion in US history. That’s great! The economy is also continuing to grow at a moderate rate.
Now for the reality check. Does this mean that there is some looming recession? If so, how might that affect stock prices?
THE U.S. ECONOMIC CYCLE IS DIVIDED INTO FOUR STEPS AS FOLLOWS:
1. Growth (Recovery)
3. Contraction (Recession)
The question is when do we move from the peak to recession? It’s not if, it’s when. While the length of this expansion is remarkable, does it hold any ignificance? Does the duration of an expansion have predictive value? Should we be concerned about a looming recession based on the extended period of growth we are experiencing? The short answer is “probably not.” Although each day brings us closer to the next recession, it’s more important to focus on what the economic indicators are telling us. There is no doubt there will be another recession. However, we do not know when it will occur or its magnitude.
When investors believe a recession is imminent, selling pressure will intensify and stocks will likely decline. Will there be another “false recession signal” like we had in December 2018? Perhaps. However, as of the end of July, there was no ign of a recession. Even though things can change quickly, the economy is strong, and I expect the expansion will continue for a while longer. Stay tuned.
So, because 99% of our clients are retired or retiring soon, we tend to err on the ide of caution. Meaning that, for the most part, our clients can’t afford to lose their hard-earned dollar. The way that we manage portfolios takes most of the unpredictability of the stock market out of the equation. This gives our clients a more comfortable and predictable outcome year after year.
To see how we achieve this goal, please schedule an appointment to discuss with your American Retirement Advisor. We are here to help.