Positioning portfolios for future growth is key during market downturns
Summer 2022 is in full swing and families are hitting the road for their favorite vacation spots. Weighing heavily on travelers are the rapidly rising food and energy costs, which are making summer getaways much pricier.
To counter inflation, Fed Chairman Jerome Powell announced on June 15 a three-quarters of a percentage point increase in interest rates. Powell indicated that multiple 75 basis point hikes are possible if inflation readings don’t start to come down. “The pace of those changes will continue to depend on incoming data and evolving outlook on the economy,” Powell told CNBC. “Clearly, today’s 75 basis point increase is an unusually large one, and I do not expect moves of this size to be common.”
The United States Consumer Price Index rose by 8.6%, the highest year-to-year increase since 1981, after rising 8.3% previously. Gas prices are three times more expensive than last year at this time.
Fed officials are hoping these moves will result in a “soft landing,” a slowdown that curtails inflation without a recession.
The calm amidst the storm
While things seem pretty chaotic right now, there is reward in maintaining composure. This happens by staying focused on short-term and long-term financial goals. “During this market downturn, we come back to the client’s financial plan – their family’s goals and objectives," said Fox Financial Group Wealth Advisor Jay Fox, who began his financial planning career on the heels of the 2007-08 recession. "We are executing strategies in portions of our client’s portfolios – opportunistically rebalancing some positions, including:
- tax-loss harvesting
- reinvesting dividends at discounted share prices
- positioning cash for future growth
Our job as Wealth Managers is to get our clients to the other side of this temporary market downturn, because that’s exactly what it is - temporary."
Whether the Fed’s move prevents a recession or it
is too little too late, the past 90 years have proven
that staying the course is the best hedge against
inflation.
"The pain investors feel is real, and I will validate that 100%, but there is always a recovery and relief on the other side of that pain," noted Fox, adding, "That’s where we are taking our clients. We are honored to be in the position to continuously remind them of that fact. It strengthens the relationship, and we find it incredibly rewarding.”
If you have questions or concerns about recent market volatility and/or are seeking a hands-on financial planner, please don't hesitate to reach out to Fox Financial Group at 636-534-7252 or info@foxfinancialgrp.com. We would be delighted to hear from you!
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