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FORECASTS & TRENDS E-LETTER IN THIS ISSUE:
New Year Investing Decisions In money management you always reap in a different season than you sow. And by the way, not all fruit ripens at the same time. When you have a peach tree, they’re not all ripe at once. They come in little by little. Investments can take time to grow too. Instant success is rare. When I started in this business, everything was dominated by stocks, bonds, mutual funds, buy-and-hold strategies, and basic equity-bond diversification. In general, this worked well before this century. A lot has changed since I started in the business. Technology has had a big impact on how markets and investors operate. The interest rate and fixed income environments have changed dramatically. We have seen an increase in risk-managed strategies that can deliver competitive returns while seeking downside protection during volatile periods or in bear markets. Active investment management can use fundamental and/or quantitative analysis. Quantitative analysis is designed to help evaluate investment allocations based on empirical information and not our emotions. It seeks to avoid deep portfolio declines during difficult market conditions and to become invested again when the market begins to show positive signs. Of course, no methodology always knows the perfect time to jump in or out of the market. Keep in mind that active investment management isn’t just strategies that use computer algorithms to make trading decisions. What I call old school active management includes strategies where an investment advisor uses fundamental analysis to determine whether to own a company stock or bond. A combination of active investment management strategies may best meet the needs of an investor’s situation, attitude toward risk and overall comfort level with the specifics of any investment. I mention the above, because now is a time when many investors evaluate how their investments are doing and whether to make a change based on just a few months of performance rather than over a full market cycle. Don’t forget to look at how an investment fits into your overall portfolio. An investment can be out of favor now, but over the long-term could potentially average the returns you expect and help lower your overall portfolio risk. Between then and now or the now and the what’s coming next, there is always the delay. This is irritating to most people, to make an investment or a plan and not have it instantly come to fruition. Identity Theft and Organizing Your Important Financial Information Tax season is also scamming season. While fraud happens 24x7, 365 days, tax season creates a prime opportunity for criminals to prey on already tax-weary consumers. Tax filing can be daunting and confusing, making people anxious about making sure they follow all the rules and don’t run afoul of any government agencies. Scammers know this and try to take advantage of those fears. Check out the IRS taxpayer guide to identity theft. You will find in the guide signs of identity theft and steps to take if you are a victim. Be aware that the IRS doesn’t spontaneously contact you by email or text messages to ask for personal or financial information. Stay alert! One thing that should be helpful this time of year is a FREE guide we can offer you to help organize your important financial information. It could be helpful in preparing your tax returns and helpful to your heirs after you have passed from this life. We call our guide Your Financial Life. It offers a simple and easy way to organize this information. If you would like a copy of this FREE guide, please click on this link. Distrust of Media Continues Can anyone truly rely on our news media? Gallup found that just 7% of Americans have a great deal of trust and confidence in the media, and 27% have a fair amount. Meanwhile, 28% of U.S. adults say they do not have very much confidence and 38% have none in newspapers, TV and radio. Notably, this is the first time the percentage of Americans with no trust at all in the media is higher than the percentage with a great deal or a fair amount combined. News sources have become so clearly opinionated that they wear their views as a badge of honor and a competitive differentiation. Does anyone not understand the political leanings or social views of Fox News, CNN, MSNBC, Newsmax, The New York Times, The Washington Post, or the Washington Examiner? Unfortunately, news and opinion are now mixed to the point of non-distinction in many situations. Competitive pressures force news media to sensationalize headlines to stand out. Everything seems to require the term “Breaking News!” The bottom line on news is it may be constructive for us to reevaluate our relationship with, and subsequent reactions to, today’s news and the sources from which we obtain it. Our favorite news outlets may not always be the best source of information for our decision making. It is certainly important for us to be well informed on the latest political, business, economic, and market developments. But it is equally important to recognize that short-term, news-driven investment decisions are generally not a wise course of action — especially for individual investors who may lean toward overreaction. Gary wrote about this problem in his E-Letter on August 8, 2023. Things seem to be getting worse in the trust department. The Recession That Didn’t Happen Let me start with a quote by Gary in his E-Letter from September 26, 2023:
In the Wall Street Journal on January 25, 2024, Gabriel T Rubin states: “The U.S. economy grew 3.1% over the last year, defying projections of a recession as a resilient labor market supported strong consumer spending.” Gary was correct in not jumping on the bearish bandwagon. What part will a strong economy play in the November elections? We will have to wait and see. Be careful out there. Make good choices. All the best, Phil
SPECIAL ARTICLES: Taxpayer guide to identity Theft Every 2024 Tax Deadline You Need to Know American’s Trust in Media Remains Near Record Low What Recession? Growth Ended Up, Accelerating in 2023
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