Tyler Fall, MSF’s Post

Day 14: 📊 The Equity Market Equation: Inflation’s Dual Impact [Part 4 of 5 — Playing Rates: Trader’s View] 🚨📚 Financial Literacy Essentials: Understanding Inflation and Interest Rates in 18 Days 📚🚨 (A Series by Tyler J. Fall, MSF🎓👔) ⏪Previously: Market Expectations & Institutional vs Retail 🎉Surprise Factor: Well, Not as Uncommon as I previously Insinuated, the case of ‘Shocking News that even Surprises the People Who are the Best at What They Do’, does happen. Inflation Surprises, or Unforeseen Interest Rate Hikes, Shock the Markets, and the People who May Very Well Be in Cahoots begin simultaneously ditching the Game of ‘Follow the Leader’, and instead Begin Playing a Game that more closely Resembles that of “Chicken”, while Retail Traders just happen to sit back and watch it all go down, Riding the Tide when they can, or attempting to be the Next Contrarian Legend in a Reddit Community. Unexpectedly High Inflation leaves everyone Uncertain, and, although the Institutions Hold a Majority of the Investment Supply, they Aren't Necessarily Keen on Going Against a Tide, either. However, they May be Enticed to Beat Everyone Over to the Fixed Income Investments, because What Fun Are Those? (sigh, they aren’t bad guys). This Can Undoubtedly Trigger Market Volatility and a Prompt Sell-off in Equities as Investors Adjust Their Expectations… amidst… Panic. 💹 Interest Rate Investment Strategies A bit ago, we covered how Rebalancing Portfolios is Necessary to Maintain Your Portfolio's Allocation balance at a Suitable Level for it to Remain in Line with your Investment Profile, and, most notably, Your Risk Tolerance. As Interest Rates Rise due to Increased Inflation, Equities see Increases in Volatility (To Note: this Volatility is the Most Widely Used Measurement Of Risk in regards to Investments, as it is This Variability in Price Levels that Constitute Risk (so: I ask… how Suitable ARE these Markets?). As Most Investors will Rebalance at These Times in the Market cycle, they do it by Reducing The Risk Exposure presently found in Their Equity Holdings by Exchanging Them in Favor of Fixed-income Securities (hence, my previous reference). This is for 2 reasons: 1. Predictable rates of return on investments are the complete opposite of volatility, especially volatility that is so unpredictable and experiencing significant downwards momentum, and 2. When Rates Decrease Again (as they must at some point for our economy’s sake), the returns will remain the same (fixed). So, not only do they calm their experience in the storm, but they also get to relish in it in the aftermath. ➡️ [Catch the End in Part 5] 🔗Visit: https://lnkd.in/ezGD5hjQ 📖Bookings: https://lnkd.in/dcfVhhm7 #Finance #Cash #Money #Wealth #Invest #Trader #Stocks (This post is for informational purposes only. Not investment advice. Investment decisions should be made based on individual financial objectives & risk tolerance) Disclosures: thrivent.com/social

Day 14: 📊 The Equity Market Equation: Inflation’s Dual Impact [Part 1 of 5 — Stock Prices & The Central Banks] 🚨📚 Financial Literacy Essentials: Understanding Inflation and Interest Rates in 18 Days 📚🚨 (A Series by Tyler J. Fall, MSF🎓👔) Everyone's favorite subject in finance: Equities (aka “Stocks”). So, how do inflation and interest rates influence investor decisions and market performance? Well, contrary to my original prompt on this series, and this being the underlying reason for my slight hiatus from it, I wanted to go more in-depth on this specific topic. So… Hello, 5-Part Post! 👍The Good and The Bad👎 We know that inflation erodes purchasing power, but we also know that it can signify economic growth, affecting different equities in opposite ways: 🟢The Good Companies in Necessary Industries, or with Brand Loyalty, can keep business afloat while passing on inflation’s higher costs to consumers These higher costs, depending on the Cost Ratios (Losses Passed-On vs Losses Taken), can actually lead to increased Revenues and Profits Increased Profits → Boosted Stock Price 🟥The Bad: Companies without this luxury are not able to pass these costs on to consumers when demand decreases These higher costs, due to the comparatively inverted Cost Ratio, can lead to decreased revenues and profits Decreased Profits → Depleted Stock Price 🏦 The Central Banks’ Two Cents (+ Interest) Again, this Cost Ratio is affected by increased Interest Rates, as the Central Banks increase rates to combat inflation as rates make things more expensive, thereby decreasing demand, which slows spending, theoretically curbing inflation. This can lead to the re-valuation of equities: Increased Business Expenses → Increased Goods & Services Prices → Consumers Buy Less → Company Earnings Drop → Stock Prices Drop Secondly, and not as widely known, Earnings during these times are Discounted at Higher Rates, meaning they are “Perceived as Less Than What They Seem on Paper vs The Applicable Interest Rates and Inflation Rate” (Here: Discounted = “Real Value”). This makes Stocks Less Attractive, EVEN IF they are Performing Well vs Other Companies in the Same Industry This is especially true for Speculative Corporations (e.g. “High-Growth-but-Not-Yet-Profitable Companies). Some may be looking at Tesla right now, as an example (albeit, different) ➡️ [Read-On in Part 2] 🔗Visit: https://lnkd.in/ezGD5hjQ 📖Bookings: https://lnkd.in/dcfVhhm7 #Finance #Business #Money #Investment #Wealth #Investing #Invest #Trader #Stocks #FinancialFreedom #FinancialLiteracy #FinancialPlanning #Education #Inflation #FOMO (This post is for informational purposes only and is not intended as investment advice. Investment decisions should be made based on individual financial objectives and risk tolerance) Disclosures: thrivent.com/social

Day 14: 📊 The Equity Market Equation: Inflation’s Dual Impact [Part 5 of 5 — It’s All Fun & Games Until…] 🚨📚 Financial Literacy Essentials: Understanding Inflation and Interest Rates in 18 Days 📚🚨 (A Series by Tyler J. Fall, MSF🎓👔) ⏪Previously: Surprises Aren’t Always Fun & Fixed Investments 💹 Fixed Setbacks? Yes. A few are possible. Mistiming reallocation, and being too early when there’s the possibility of inflation persisting for a sustained period of time, means these rates may not be attractive pretty soon. Also, as we can see in Today's Market, some Equities are at All-Time Highs with most Recoveries over their Pre-Recession peaks by +10%. “Well, why couldn’t they just sell [their fixed investments]?” They could have! But, the Time for which these Fixed Investments are forced to be held (or, more difficult to sell at a reasonable price), can be Equally Detrimental to an Investor’s Portfolio. The Financial Sector in 2022, where the Biggest Firms faced Bankruptcy rumors as they couldn’t make up the Losses due to their Entrenchment in Fixed Income Yields, were plagued by the Inverted Yield Curve — they couldn't get out, reasonably. Oppositely, due to ST Rates > LT Rates from this Inverse (opposite of normal), this ‘Timing’ issue with Fixed Investments is Lessened, and can be a Strategy for Buffering the Difficulties during Inflationary Periods. Wait... Sound Familiar? To prove a point, Everybody Knows what CDs are now, but, Why? Yields Inverted, and then 2-3 Mo. Yields became Higher than LT Rates. Easy, isn’t it? So, then, Why do You think Your 5% APY Savings Account will stay that way? Hmm. 🥁Back to THE Question: Are we Scared of ACTUALLY Losing Money, OR is it the Opportunity Cost that Plagues all Investors when they Miss an Opportunity? Just a bad case of FOMO?! 🧠Verdict: Ask Long-Term Investors⌛ Long-Term Investors see Market Dips as Buying Opportunities. They Focus on "Good", Not "Perfect". Well, with Their Historical Returns vs Timers, and the Avg Recovery Time for the Indexes being about 1.5-2yrs from their Lows, Maybe these Boring, No-Fun Having, Compounded Interesters Really are Onto Something… and We All Just Have a Bad Case of FOMO🤷 ⏰PSA🚨 I said this series would be written in a simple way… but Equities Trading is NOT Easy, and NOT Simple. Be safe, and, if you trade, trade smart — you never know when your Wifi might lag, and that screen could refresh in your hand as you just gambled away the funds that could’ve doubled your retirement savings. Have your attention? Awesome. Now, Let’s get you a strategy that works for you 👔 🔗Visit: https://lnkd.in/ezGD5hjQ 📖Bookings: https://lnkd.in/dcfVhhm7 #Finance #Business #Money #Wealth #Invest #Trader #Stocks #FinancialAdvisor #Education #Inflation #FOMO (This post is for informational purposes only. Not investment advice. Investment decisions should be made based on individual financial objectives & risk tolerance) Disclosures: thrivent.com/social

Professional wealth managers need to be more active online.     "Finfluencers" who dish out financial planning advice as if they are registered CFPs or stock picks like Warren Buffet garner a significant amount of attention, especially from the next generation.   According to BlackRock, 35% of adults aged 18–34 leverage social media for investment research.   That is why it's important for professional money managers to find their voice online.   We need fewer penny stock picks and more sound financial advice on our feeds.

𝗗𝗮𝘆 𝟭𝟮: 📉 𝗠𝗮𝗿𝗸𝗲𝘁 𝗥𝗲𝘀𝗶𝗹𝗶𝗲𝗻𝗰𝗲 - 𝙇𝙚𝙖𝙧𝙣𝙞𝙣𝙜 𝙛𝙧𝙤𝙢 𝙃𝙞𝙨𝙩𝙤𝙧𝙮 🚨📚 Financial Literacy Essentials: Understanding Inflation and Interest Rates in 18 Days 📚🚨 (A Series by Tyler J. Fall, MSF🎓👔) When it comes to the markets, I'm sure our old history professors would surely have an issue with how it tends to … 🎢The '70s and Early '80s: A Classic Case Study Remember the late 1970s and early 80's? Well, I don't, but inflation rose to just above 14%, prompting a dramatic response from the Federal Reserve, with interest rates peaking at about 19%. Compare this to the 9.1% peak inflation rate, and about 5.25% interest rates in 2022-2023, and it puts it into perspective. The controversial move to raise interest rates so high is still debated today, but deemed necessary to tame the inflationary spiral, albeit at the cost of a severe recession. It serves as a reminder that decisive policy action, while often painful in the short term, can restore economic balance over time. Yet, it begs the question: Why dig the hole in the first place? 🔄The Great Recession: A Modern Tale Fast forward to the late 2000s — the Great Recession brought yet another infamous economic period. However, this time, Wall Street’s arrogance and greed led to a shattered housing market, and unprecedented banking bailouts, stimulus measures, and implementations of financial industry regulations. 𝘐𝘯𝘵𝘦𝘳𝘦𝘴𝘵𝘪𝘯𝘨𝘭𝘺 𝘦𝘯𝘰𝘶𝘨𝘩, the Fed's near-zero interest rate policy helped the economy slowly rebound. By 2011, real GDP returned to its pre-crisis peak, allowing the recovery of household net worth, employment, etc. In short, interest rates do not need always need to be raised, depending on the circumstance! 📈Today's Market: Drawing Parallels In 2022, 41-year high in inflation rates prompted the Fed to raise interest rates throughout the year. Sadly, there has still been no clear decision on rate cuts (the stock market thinks otherwise). The previously mentioned 2022-23 rate figures tell the worst of the story so far, but with stubborn, reportedly elevated inflation in the CPI update this week, it's worth asking: Is the worst 𝘳𝘦𝘢𝘭𝘭𝘺 behind us? We'll let Jerome figure that out 🎓Your Informed Financial Strategy History has a funny way of repeating itself, no matter how specific the details. Understanding the past, we can better position ourselves to during economic declines… even if only mentally. Let's help get you there safer 🙏 Questions & Concerns? 🔗Visit: https://lnkd.in/d3dvuN69 📖Bookings: https://lnkd.in/dcfVhhm7 #Investing #Inflation #Money #Stocks #Economy #Fed #CPI #InvestinYourself #Trading #InflationReport #Trading #Florida #Thrivent #Finance #Invest #Wealth #Money #Cash #History #Recession (This post is for informational purposes only and is not intended as investment advice. Investment decisions should be made based on individual financial objectives and risk tolerance) Disclosures: thrivent.com/social

I'm 30, what portion of my savings should be in stocks? 📊 A fascinating query from a recent financial literacy workshop. Many swear by the formula: Risk Investment % = (100 - Age). That means at 30, you'd look at 70% in equity. 🚀 But here's a thought - at the sprightly age of 30, with most financial milestones on the distant horizon, why not lean heavily into wealth-building assets? 💡 My advice? If those savings aren't needed imminently, push the boat out to 95% in equity, once you've got your emergency fund sorted. 🚤 Remember, TIME is the magic ingredient with equity. Historical trends are clear - the longer you hold, the smoother the ride. 🕰️✨ Quick musing to wrap up: After hitting 40, do you reckon our risk appetite goes up or down? 🤔

Although I am averse to making financial market forecasts, I can say with some level of confidence that over any long-run horizon most investors will have to encounter painful periods of losses in equity markets. Some seem unaware of this (or at least behave as if they are) while others spend most of their time attempting to predict when such phases will occur. Neither of these will lead to good outcomes. If I am confident that severe declines will happen, do I have anything to say on when they will arrive? No. I have little idea. The next one might begin tomorrow, or in ten years’ time. They have transpired in the past and will happen at some unpredictable point in the future. The difficulty of experiencing and living through tumultuous times mean that many, many investors dedicate themselves to reading the runes of financial markets. Seeking that ever elusive goal of capturing the higher returns available, while avoiding the downside risk that comes as part of the bargain. This is a fool’s errand. The cost of consistently attempting to predict the next equity market drawdown – and often being wrong – will be pernicious and permanent. The compound impact of these poor decisions will likely do far more lasting damage than the next bear market we experience. If we are not busy predicting the gyrations of equity markets, the other major risk is that we are not expecting such drawdowns to occur at all. While we should always be surprised at the cause and timing of a bear market (because they are difficult to predict), we should not be shocked when they arrive. All investors must have their eyes wide open – these periods are a feature of equity investing, and they will feel awful. So, if we cannot predict torrid market conditions but equally should not be surprised by them, what should we do? We cannot simply say – equities could fall by 40% – that is an anodyne statement which is easily dismissed. Instead, we need to create some vivid expectations about what the landscape might be like. We won’t know precisely what will happen but there are patterns of behaviour that are likely be a feature: – Economic news will be terrible. – Everyone will become an expert on ‘the thing’ that has caused it. – There will be constant images of red screens and traders with their hands on their heads. – Investing for the long-run will be professed as an outdated concept of a bygone era. – Some forecasters will be claiming that this was inevitable having been predicting such an occurrence for 11 years. – It will be difficult to envisage things getting better. Investors in equities win over the long-term by being optimistic, but that alone is not enough. We also need to be sufficiently realistic to understand that the long-term will include some torrid periods that will present the most exacting behavioural tests. If we don’t plan for those short-term challenges, we are unlikely to reach our long-run goals. Link to full post in the comments.

Another great post and blog from our Investment Research Director Joe Wiggins. A good reminder of long term investing and the fact we will experience painful periods along the way. It's how we react (or don't!) that matters. https://lnkd.in/ec7-KrBk

The Fed’s announcements have put investors in a giddy mood. How should advisors guide them through the good news? With answers from Robin C. Hovis of LPL Financial, Ryan Salah, CFP®, CPWA® of Capital Financial Partners, LLC, Noah Damsky, CFA of Marina Wealth Advisors, Jeremy Bohne of Paceline Wealth Management, LLC Management and Jay Zigmont, PhD, CFP® of Childfree Wealth. #financialadvisors #wealthmanagement #softlanding #inflation #FederalReserve #Fed #interestrates #AskAnAdvisor