WT Wealth Management - Special Market Update: Ignore the Noise

Hey, we get it... The last few months have been overwhelming in terms of news flow, volatility and price-gyrations within the equity markets. During times like these the professionals at WT Wealth Management really earn our stripes.

In this age of rapid technological progress, we have near instantaneous access to a multitude of news sources on our phones, computers and TV sets. No matter your preferred news outlet, inflation has been a dominant headline for several months. Now Ukraine is the new focus.

First, on inflation, the Federal Reserve is going to address this issue after months of hanging their hat on the hopes that inflation was "transitory". I think we all recognize now that it is not. The Fed will systematically tighten the money supply which will make it more expensive to borrow money thus, hopefully, curtailing demand and slowing price increases without backing the economy into a recession.

History has shown that recessions are generally accompanied by a dramatic increase in unemployment. So far we are not experiencing rising unemployment, in fact many companies are struggling to find enough workers. So that should also help the Fed get interest rates back to the pre-pandemic levels without derailing the economy.

Second, we are not overly concerned about the impact of Russian aggression in Ukraine, as geo-political selloffs within the equity markets tend to be rather short-lived. We think a large part of the decline, as it relates to Ukraine, has already been realized. Ultimately, what happens between Russia and Ukraine is a bad optic -- but has very little to do with earnings of the companies we own or the health of the US economy. Remember, Russia's GDP is small, only about the size of the state of Texas. So the geo-political impact of this situation is far more significant than the direct economic implications.

Experience has shown, the best way to get through volatile times is simple. Ignore the volatility. Years ago, I visited another very successful money manager and commented that they did not have one single TV set in their office playing the requisite financial news channel like every other money manager I had ever visited. Their managing director looked me square in the eyes and said, "that's just noise. We hate noise. Noise makes you make bad decisions."

That lesson always stuck with me and is one of the reasons I love this chart, maintained by First Trust. As they highlight, the market's resiliency through crises and change events, no matter how "end-of-the-world-as-we-know-it" they may appear at the time, provides perspective on the benefits of staying invested over the long-term.

2008-2021 Average Annual Return of the S&P 500 Index

The Investment Committee at WT Wealth Management has long felt that most of the gains within the 2022 markets would occur in the second half of the year. Covid-19 concerns seem to be fading as mask mandates are lifted across the country. The conflict between Russia and Ukraine should settle down as the world unites to slow Russian aggression. The full impact of the Fed's monetary tightening will take time to reach full effect. If corporate America can fill in the supply chain issues, this could also provide measurable inflation abatement by the second half of this year. The equity markets would view all of this with great enthusiasm.

At the end of the day, if you stay the course, what happens today, tomorrow, next week or next month will not have an impact on your financial future. If life is a long game, investing should be the second longest game. With pensions a thing of the past and social security not nearly enough for most households to live comfortably, individuals will need to invest with more determination and commitment than ever before. Sometimes that just means working harder to ignore the noise.

As always, the professionals at WT Wealth Management are here to help you make sense of the financial world around you and to help you recognize what to pay attention to and what to ignore. Please reach out.


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Any opinions expressed on this website are the opinions of WT Wealth Management and its associates only. Material listed on this website is neither an offer to buy or sell securities nor should it be interpreted as personal financial advice. You should always seek out the advice of a qualified investment professional before deciding to invest. Investing in stocks, bonds, mutual funds and ETF’s carry certain specific risks and part or all of your account value can be lost.

At WT Wealth Management we strongly suggest having a personal financial plan in place before making any investment decisions including understanding your personal risk tolerance and having clearly outlined investment objectives.

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WT Wealth Management is an SEC registered investment adviser, with in excess of $100 million in assets under management (AUM) with offices in Flagstaff, Scottsdale, Sedona and Tucson, AZ along with Jackson Hole, WY and Las Vegas, NV. WT Wealth Management is a manager of Separately Managed Accounts (SMAs). With SMAs, performance can vary widely from investor to investor as each portfolio is individually constructed and managed. Asset allocation weightings are determined based on a wide array of economic and market conditions the day the funds are invested. In an SMA, each investor may own individual Exchange Traded Funds (ETFs), individual equities or mutual funds. As the manager we have the freedom and flexibility to tailor the portfolio to address an individual investor's personal risk tolerance and investment objectives – thus making the account “separate” and distinct from all others we manage. An investment with WT Wealth Management is not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. Any opinions expressed are the opinions of WT Wealth Management and its associates only. Information offered is neither an offer to buy or sell securities nor should it be interpreted as personal financial advice. Always seek out the advice of a qualified investment professional before deciding to invest. Investing in stocks, bonds, mutual funds and ETFs carries certain specific risks and part or all of an account's value can be lost. In addition to the normal risks associated with investing, narrowly focused investments, investments in smaller companies, sector and/or thematic ETFs and investments in single countries typically exhibit higher volatility. International, Emerging Market and Frontier Market ETFs, mutual funds and individual securities may involve risk of capital loss from unfavorable fluctuations in currency values, from differences in generally accepted accounting principles or from economic or political instability that other nations experience. Individual bonds, bond mutual funds and bond ETFs will typically decrease in value as interest rates rise. A portion of a municipal bond fund's income may be subject to federal or state income taxes or the alternative minimum tax. Capital gains (short and long-term), if any, are subject to capital gains tax. Diversification and asset allocation may not protect against market risk or investment losses. At WT Wealth Management, we strongly suggest having a personal financial plan in place before making any investment decisions including understanding personal risk tolerance, having clearly outlined investment objectives and a clearly defined investment time horizon. WT Wealth Management may only transact business in those states in which it is registered, or qualifies for an exemption or exclusion from registration requirements. Individualized responses to persons that involve either the effecting of transactions in securities, or the rendering of personalized investment advice for compensation, will not be made without registration or exemption. WT Wealth Management's website is limited to the dissemination of general information pertaining to its advisory services, together with access to additional investment-related information, publications, and links. Accordingly, the publication of WT Wealth Management's website should not be construed by any consumer and/or prospective client as WT Wealth Management's solicitation to effect, or attempt to effect transactions in securities, or the rendering of personalized investment advice for compensation, over the internet. Any subsequent, direct communication by WT Wealth Management with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides. A copy of WT Wealth Management's current written disclosure statement discussing WT Wealth Management's registrations, business operations, services, and fees is available at the SEC's investment adviser public information website (www. adviserinfo.sec.gov) or from WT Wealth Management directly. WT Wealth Management does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to WT Wealth Management's web site or incorporated therein, and takes no responsibility therefor. All such information is provided solely for convenience purposes and all users thereof should be guided accordingly.

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