Autumn is a second spring when every leaf is a flower......beautiful words from Albert Camus.
Welcome to October! Fall is upon us and with it comes pumpkin spice, cooler temperatures and Thanksgiving! I know, I know....it's a little early to be thinking about Thanksgiving but for those of you who live here in the greater Baltimore area, we will be sending out our annual Thanksgiving Pie email in the days ahead. Please remember that we have moved so pick up will be at our new office in Timonium. More details to come.
Over the past few weeks there has been significant market volatility, most notably related to the threat of a government shutdown, the United Autoworkers strike and the ongoing uncertainty over interest rates and inflation. I wanted to take a moment to provide you with some insights and reassurance about these events.
-Government Shutdown: At the 11th hour, Congress reached an agreement therefore avoiding a government shutdown...for now. Government shutdowns are not rare. They've happened multiple times in the recent past. The longest government shutdown in US history just happened from December 2018 to January 2019 and lasted 35 days. While shutdowns can create short term market turmoil, they don't generally have a long term impact on the stock market or on the broader economy.
-Drama in Washington: Political infighting has resulted in the ouster of House Speaker Kevin McCarthy. Ongoing disfunction in Washington has had a direct impact on the uncertainty that riles the market.
-Interest Rates: Central banks around the world, including our own Federal Reserve, have been hiking interest rates since March of last year. Chairman Powell has increased rates 9 times since last year but decided to take a pause at last month's Fed meeting. He indicated that we will likely be in for one more rate hike before the end of this year. Rising interest rates have wreaked havoc on the bond market causing yields to rise but prices to fall. This is temporary volatility that will resolve with time. The silver lining of higher interest rates is just that...higher interest rates. Savings accounts are offering very attractive rates as are short term CD's. If you are comfortable with online savings accounts, you're likely to find the best rates there. Keep in mind that online bank accounts are FDIC insured up to $250,000! Let us know if you would like some recommendations for higher yielding savings accounts.
-Market Volatility: Financial markets have exhibited increased volatility since August due to the threat of a government shutdown and the uncertainty over interest rates. While it is natural to feel uneasy during periods of market volatility, its essential to remember that market fluctuations are inherent to investing. Your portfolio is designed to weather these short term storms with a long term perspective in mind. Remaining steadfast is vital to the long term success of your portfolio....hard as it may be at times. Warren Buffet, one of my favorite investors of all time, said it best.....“Wall Street makes its money on activity. You make your money on inactivity.” In other words, stay the course and we will ensure that your portfolio remains aligned with your long term objectives and risk tolerance.
In other news, you may have heard that the IRS is tinkering with 401k catch up contributions for those age 50 and up who fall into a "high income earner" bracket. The IRS has postponed, until 2026, legislation that will force 401k catch up contributions to flow into Roth 401k's as opposed to the traditional pre-tax portion of a 401k. The IRS has said that they will clarify the law in the months ahead. Stay tuned!
With 24/7 access to news, most of it bad, I think it's important to remember that there is plenty of good news to be had! Here are a couple of good news stories that caught my attention this year:
-In a testament to age just being a number, a 104 year old Chicago woman will be certified by the Guiness Book of World Records as the oldest person every to skydive.
-Buffalo Bills safety Damar Hamlin returned to the football field after suffering a cardiac arrest earlier this year. The human spirit is indomitable!
-7.8 million electric vehicles were sold over the last year which is a 68% increase over the previous year.* This is hopeful news about our delicate environment.
Wishing you and yours a wonderful day and a Happy Fall.
Johanna
*2023 is full of good news you haven't heard | Mashable