April Power Hour – Understanding Market Volatility and Rising Interest Rates

 

Financial Advisor webinar in Verona, WI

April Power Hour – Understanding Market Volatility and Rising Interest Rates

April Updates

  • Market Update
  • Remember, what’s happening is always more than you see (there is always a story behind the story, seek truth)
  • Gold and Silver10 Reasons it will Soar Memo from our team
  • Taxes and proactive planning – Don’t just file your taxes, always be looking ahead

For example, last year we were able to delay Capital Gains tax for a client cutting their tax bill from selling land in half. Now we are planning on how much we can take in gains this year to stay in the 0% bracket. This is just one example of proactive planning. Call us to talk more about this.

  • Estate and legacy planning 
    • Not just about planning on what will happen when you die, but how your affairs will be handled if you are hurt or incapacitated and unable to handle things yourself
    • Also, estate tax laws are changing, more and more people will be affected by estate taxes if you are not proactively planning.

Tip of the Month

Get an umbrella! Umbrella Liability is like having pre-paid legal

Understanding Market Volatility and Rising Interest Rates

Defining Market Volatility

Volatility is when the market makes dramatic moves one way or the other. Technically speaking, a pullback = –5% – 9%, a correction = –10% – 19% and a Bear Market = –20% or more.

Historically there have been 27 corrections in the S&P 500 from 1945 – 2022 (drop of 10%-19%). That is an AVERAGE OF ONE CORRECTION EVERY 2.8 YEARS.  5 of those market corrections since 1974 have turned into bear markets (drop of 20% or more).

What Triggers Market Volatility

Profit selling, corporate earnings, technical analysis, fear, and black swan events such as 911 or C0vid or a combination of these can all trigger market volatility.

Sequence of Return Risk

What does a market correction mean to my investments? It depends on how you’re invested and what stage of life you are in.

One of the biggest retirement risks is sequence-of-return risk – that is that negative returns right before retirement or early in retirement can create disastrous initial conditions from which recovery is nearly impossible.

Because of sequence of returns risk, portfolio withdrawals can cause the events in early retirement to have a disproportionate effect on the sustainability of an income strategy.

Investing is long-term, but that doesn’t mean the short term doesn’t matter. The key to investing success is to avoid big losses, especially in retirement. (To Find out more how we manage this and more, check out our March Power Hour)

Rising Interest and the 60/40 Portfolio

When interest rates rise, bond values, and bond funds, fall.

Having 60% of your portfolio in stocks and 40% in bonds has been considered conservative by many. However, recent volatility combined with rising interest rates has sent 60/40 portfolios on their worse run since 2008. (source FA magazine online)

Common Portfolio Wisdom

Is the key to safety diversification? Does more risk equal more return? (not according to the Sharpe and Sortino ratio! Listed in for more on this!) Is it just a paper loss? Does professional management equal better returns? What is the greatest risk to investors today?

Find out all these and more by listening in or downloading our Common Portfolio Wisdom Axioms.

We serve clients in Mineral Point WI, Dodgeville WI, Platteville WI, Lancaster WI, Fennimore WI, Boscobel WI, Richland Center WI, Muscoda WI, Spring Green WI, Mazomanie WI, Sauk City WI, Middleton WI, Madison WI, Fitchburg WI, Verona WI, Mount Horeb WI, Barneveld WI, New Glarus WI, Monroe WI, Belleville WI, Oregon WI, Stoughton WI, Darlington WI, Cuba City WI, Hazel Green WI, Belmont WI, Dubuque IA, Freeport IL

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