RecessAugust 14, 2019 -
Categorized in: IAG News
The back to school shopping season is in full swing. Kids are excited to get new clothes and school supplies. Parents are excited because a new sense of normalcy and structure is on the horizon.
Ask any elementary school student about their favorite activity during the school day and many (mostly boys) will tell you it is recess. According to Miriam-Webster, recess is “a suspension of business or procedure often for rest or relaxation.”
Recess is a specific time set aside for fun and relaxation. Recession is an uncomfortable time that brings on stress and tension. Recess starts and stops when the bell rings. The official bell for recessions does not ring until long after they have started and stopped.
Despite the lack of a ringing bell, global traders are currently taking a recess from optimism and focusing on the possibility of a global recession. They are theorizing that escalating trade wars, Brexit uncertainty, and political unrest will cause global economic pain in the future.
Unfortunately, such recession expectations can be self-fulfilling. If some employers and consumers believe a recession is coming, they will likely cut back on hiring or business expansion and put off major purchases because their economic future looks uncertain.
Those cautious decisions can result in slower economic growth, raising recession expectations for additional employers and consumers who then spend less money which results in even less economic activity. Repeat this process enough times and a recession could develop simply because enough people believed a recession would develop.
At IAG our objective is to add structure to our clients’ investment process to help take the edge off the stress and tension that often develop in times like these when the unstructured economy and financial markets are in flux.
While nobody enjoys watching their account values decline, ensuring your portfolio’s investment risk is structured properly for your family’s personal financial goals can create the confidence you need to survive unscheduled recesses from optimism. The challenge is retaining your confidence when the unrelenting barrage of negative news headlines try to erode it.
The coming months are more likely than not to include a recession-fear-induced recess from traders’ early year optimism. Be sure to keep your long-term plan in focus when short-term uncertainty abounds.
Quote of the week: Peter Lynch: “Far more money has been lost by investors preparing for corrections or trying to anticipate corrections than has been lost in the corrections themselves.”
Securities offered through LPL Financial. Member FINRA/SIPC. Investment advice offered through IAG Wealth Partners, LLC, (IAG) a registered investment advisor and separate entity from LPL Financial.
Any opinions are those of IAG and not necessarily those of LPL Financial. Expressions of opinion are as of this date and are subject to change without notice. This information is not intended as a solicitation or an offer to buy or sell any security referred to herein.