There was some unwelcome information in recent economic data that caused markets to reassess expectations:
- Inflation didn’t fall as fast as expected. The Consumer Price Index showed inflation rose 6.4 percent, year-over-year in January. That was an improvement over December’s pace and the seventh consecutive month of falling prices, but economists expected price increases to slow more quickly.
- Consumer spending accelerated. Americans were in a buying mood. Spending rose 3.0 percent in January after declining in November and December of 2022.
Inflation May Not Be Over
Bullish sentiment in stock markets has been supported by the idea that inflation will continue to slow, and the Fed will be able to ease up on interest rates. The Economist suggested stock markets may be overly optimistic. The world’s battle with inflation may not be over.
What about the Bond Market?
After a chorus of Fed officials took the stage to let everyone listening know the federal funds rate would likely need to move higher – and stay higher – for longer, the bond market capitulated. This presents GOOD YIELD opportunities for short-term government bonds. This gives us a haven to wait out the market conditions. If you’d like a more detailed look at this, please reach out to me.
What Do You Value Most?
The 2022 Modern Wealth Survey, conducted for Charles Schwab by Logica Research, asked Americans whether personal values are more important to life decisions than they once were. The majority said yes.
“Almost three-quarters of Americans (73%) say their personal values guide how they make life decisions more today than they did two years ago, and nearly an equal number (69%) say that supporting causes they care most about is a top consideration when it comes to their financial decisions. When asked which personal values are their biggest motivators, Americans prioritize doing what’s best for others, including the environment and the greater good, as well as their family and friends, followed by saving more and reducing unnecessary spending.”
Defining and prioritizing values takes time and can be a challenging exercise. The Good Project, a research initiative at the Harvard Graduate School of Education’s Project Zero, offers an online value-sorting activity. Visitors review a list of 30 values and choose 10 to begin. The list includes options like:
- Fame and success
- Courage and risk-taking
- Creativity and originality
- Power and influence
- Hard work and commitment
- Pursuing the common good
- Recognition in your field
- Solitude and contemplation
A majority of each generational group that participated in the Modern Wealth Survey agreed that values affect their investment choices: 68 percent of Baby Boomers, 73 percent of Gen X, 75 percent of Millennials, and 82 percent of Gen Z.
Overall, “When looking at the factors that influence investment decisions, a company’s reputation (91%) and its corporate values (81%) are almost as important as more traditional factors like a company’s performance (96%) and its stock price (93%). As personal beliefs and interests become more important, many investors (84%) are also interested in having a more personalized investment portfolio.”
When I read this report, all of these values and results are what I experience in the clients, friends, and families of this practice. All of you are exceptional people who bring light, strength, and many times a touch of humor to all of us.
Focus – Think About It
“For me, I am driven by two main philosophies: know more today about the world than I knew yesterday and lessen the suffering of others. You’d be surprised how far that gets you.”