Controlling Variables of Your Financial Emotions
|By Sarah Carlson, CFP®, CLU®, ChFC®|
Controlling variables of the different financial emotions during this time may seem discouraging. However, ask yourself, "What do we have control over in the world?"
If you are like most people, it feels like not much as we get influenced by world challenges and terrible news daily, yet we strive to have the mindset of financial security. This financial market is reminiscent of other pullbacks we have had in the past. I have heard from some clients that this time "feels different." But I wonder if it is so different in reality.
Do you remember, at the beginning of the pandemic, spring of 2020, we had a substantial pull back, which seems like so long ago? The market rebounded quickly; that type of recovery is what market analysts call a "V" shape recovery. I, too, think it feels different, for we are still dealing with the pandemic and getting back to activities we enjoyed before Covid hit.
In 2008, that market pullback took longer to recover, and analysts refer to that as a "U" shape recovery. So how long will this pullback last? That is a big unknown. It's too early to tell, but the foundation of our economy is in good shape. Consumers seem to be in good condition, and the job market is strong. If you have flown recently, it seems like everyone is scrambling and getting back to enjoying experiences.
That is the significant shift recently the consumer has moved from consuming stuff that gets ordered online to enjoying experiences. Some portfolio managers call this a trend of "revenge spending." This is when people deprive themselves of something they want, demand builds up, and they will indulge in their need to enjoy. Many companies are highly profitable regardless if we are in a recession or not.
The big monster in the economy is inflation, which looks like it won't be easy to tame. I know these times are uncertain, but we have been through tough times before and come through okay. I believe we are going to get through this one too. It's not so different; we are just as Jim Cramer likes to say," We are climbing the wall of worry."
As Spokane financial advisors, we are here to help any time you need perspective. It's like we are on a sailboat going to your destination; it's our job to keep you focused on the horizon when we hit some waves. We are in those waves, and you may be sick to your stomach, but we will be by your side to navigate to your destination. There will be smoother sailing ahead while controlling variables of your financial emotions.
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Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
All investing involves risk including loss of principal. No strategy assures success or protects against loss.
The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.