October State of the Market
Posted on 10/29/2014
State of the Market
Contributed by Mark A. Gajowski II, CFP®, CLU®, CEBS®
magii group of companies
Try to remember the long-term perspective that many investors often forget in this day of immediate information sharing. Hence the real benefit a Certified Financial Professional ™ (“CFP®”) can bring – helping you remember to stay calm when all else around you start to panic. In this month’s newsletter, I would like to take a quick review of what is going on and how you can benefit from it.
First off, yes, EBOLA is scary, but you are more likely to be struck by lightning! The real things to focus on are the positives – interest rates are extremely low – hence a low cost of borrowing money. Housing is an exceptionally strong motivator to the overall economy as so many other industries rely on it. Look at the fact that 30-year mortgage rates have come down again, actually bouncing off 4%! Now that is cheap cost of capital! Further, and less noted, thus far we have had a warmer than average Fall, with no serious storms (trusting, of course, that I am not jinxing us all by stating same). Warmer-weather is also good for many industries that work outside, keeping money flowing into the overall economy.
Additionally, as I type this, Brent crude oil is around $80 a barrel – down almost $20 a barrel from this time last year, and close to $60 less than all-time high five years ago! By extension, that makes gasoline, which powers most of our cars, far cheaper (heard our NJ clients have 87octane at under $3/gal!). This, in my opinion, is even better than a tax cut, as every person that owns a car is reminded of the money that they are saving at the pump!
I’d also like to point out something that is all too often lost in the day-to-day “noise”. Sometimes, even the strongest stock, or stock sector, is subject to move with the overall market. Price of anything, as many of us remember from our economics classes (thanks Mr. McKillop), are no more magical than the basics of simple supply-and-demand, no matter how complicated the ‘pros’ would like to make it seem. Stock prices go up when there are more buyers than sellers and down when the reverse is true. The real ‘magiic’ (no, not a typo), is in having the fortitude to have a plan, a goal, an objective and the confidence and discipline to stick to them.
In the end, the longer-term benefits to the consumer from cheaper oil and ultra-low interest rates far exceed the long-term ruination of a stock market that may have peaked a month ago. Now, to be clear, I do not believe that the selloff that we are currently experiencing is over. In fact, I think the panic that the market is recently experiencing may take us down even further. However when the smoke clears, one thing will remain constant – those that have professional guidance and perspective will likely fare better than those without. Try not to ignore all the positives – remember, whatever we focus on expands.
In closing, stay the course, recall your goals are your own, and so too should your portfolio and overall financial plan be a reflection of your overall needs. Working with a wealth management firm like magii, with credentialed professionals is an excellent way to stay on track to your definition of success.
As always, if we can be of any service to you, please do not hesitate to reach out to us. It is my team’s pleasure to serve so many of you for so long, thank you for your continued trust and confidence.