(Every breath you take)
The Global Economy is headed into a slowdown and I, like many, believe a recession is in progress but unconfirmed. Over the last few months, I have discussed data that points to this and provide recommendations. True, that some but not all data have not confirmed this yet. Recently, in addition to the inverted treasury yield curve, is the U.S. PMI has dropped below 50 this month from 50.4 in July to below 50. This is low since 2012. Despite this and the volatility whipsaw of the markets, there are reasons to be optimistic.
First, don’t panic, and here are a few things not to do. It is during these cycles that clients and humans, in general, will find themselves checking their accounts more often. A lot more often. Also, there will be an urge to become emotional and to start making decisions on when to sell or to second guess a portfolio’s strategy. Here is some advice. Do not check your account unless planned for by a strategy. You do not need the stress and, in the scheme of life, this volatility is for the short term. Do not be the culprit sung about by the Police in “Every Breath You Take” and let this market consume your thoughts.
Over 2019 and 2020, more news and data points will confirm the slowdown and a small Recession for the United States and the larger global recession. This news will be lagging and will come out after it occurred and confirmed, with data released month(s) after it occurred. The good news here is that historically a recession has been overdue and to check it off the list would allow the economy, corporations and our portfolios to continue to grow. In other words, the system needs one to be healthy. Typically, history has dictated one recession every decade. Since the last recession in 2008, the U.S. economy has expanded very, very slowly. Inflation seems not to have grown at all. With what strengths the U.S. economy has, such as a shortage in housing, all-time unemployment lows, and global strength, it is poised to remain and strengthen as the world economic leader. This bodes well for the U.S. economy, corporations and of course you.
Remaining cautious during this time frame, keep your powder dry, and do not let the news consume “Every Breath You Take.” Prepare your portfolio to weather the volatility and position to add to your portfolio at a discounted price. I always say, have a plan on what to buy and at what cost if it were on sale. If you have identified these ingredients, then you will have a recipe for success. Stay the course with your plan, review how you have performed, and make adjustments as necessary.
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Andrew F. Kotyuk, CIMA* is CEO and Principal of Alpha Wealth Management LLC
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