Mom called Ep 111

Did your parents ever leave you a list of chores to do when they left for the day? In the summer sometimes, my parents would leave me and my sister a long list of things to do around the house before they got home. We’d look at the list when we got up, then we’d procrastinate and go back to sleep or watch TV. I’m pictured below with my mom in my 20s.

Then, the phone would ring. We knew it would. It was mom asking how our day was going and of course, she wanted to know how the chore list was going. It was really easy in the moment to get creative in how we answered her questions about our progress. It was always tempting to fudge the truth a little to make the situation better than reality. Amelia and I are pictured below patiently waiting for our Chinese food last Saturday.

The media and the government have gotten creative with answering whether we are in a recession or not in order to make our economic situation better than reality.

The traditional definition of a recession is being redefined. Historically, the definition of a recession has been two negative quarters of growth in the gross domestic production. In the first quarter of this year the GDP declined -1.16% and at the end of June the second quarter reading was -0.90%. We are by definition in a recession. Our daughter, Ansley, is pictured below after church on Sunday.

According to Tom Siomades (pictured below), the chief investment officer of AE Wealth Management, the average recession has lasted on average six to twelve months since World War II. He states in recent commentary that we should be mindful of the possibility of another six months of negative economic growth.

If you’ve lost money in the first half the year, brace yourself for the possibility of more losses. If you’re properly allocated and have a plan in place you may have planned for down markets. If you’re winging it right now though, you have reason to be concerned.

Remember, we want three types of funds: Liquid, protected, and growth. Check out last week’s newsletter for a description of the three types of money.

We have become increasingly spoiled by the market popping back up after recent downturns like it did in 2020. This pop effect is due in large part to the government intervening in the markets to stabilize them. Now the government is on the other side of the table from investors.

Simodaes stated, “We are not seeming impetus for the market to come back up.” Why? Because if the government lowers interest rates or uses quantitative easing to create more new money, inflation runs away. Amelia and Ansley, my daughters, pictured below.

The government’s hands are tied with how much they can help the economy bounce back this time. This is a problem for folks who have gotten used to the market bouncing back and taking off for more growth. This may not happen this go around. It may take longer for the economy to right itself.

Adding lighter fluid to the issue is the Federal Reserve has not stated what it’ll do at its September meeting. They could give forward guidance as to where rates may go but they are not, which is driving market sentiment down.

The value of having a written financial plan for how to navigate these times can’t be understated in times like these. There may be proactive steps you can take now to help yourself have the best outcome possible. If you’d like to explore this more, please call our office at 864.641.7955 to schedule a complimentary 15-minute call to discuss your situation or click here to schedule your call now.

Until next week,

David C. Treece