What’s going on with Stocks?

Investment Strategy

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I'm Financial Coach, NFEC-certified Financial Educator (CFEI), and café-con-leche fanatic with a passion to help CLOSE the gap in Financial Literacy through my business Wear Your Money Crown™.

HI, I'M ANNA!

A few thoughts to share

2021 has been a record-breaking year for the U.S. stock market! The picture below is of the S&P 500 (one of the major U.S. indexes), showing the number of record closes. In fact, it has had 54 records this year – the MOST since 1995!

Wowzers…

S&P 500 Record Closes

Now, what I’m about to say matters to any investor globally – from Australia, Asia, UK, Europe, Latam – and of course U.S.A. Why? Bc the S&P 500 index has MAJOR impact on global markets.

When such bullishness – which is market speak for positivism – exists, there can easily be pullbacks. A pullback is when stocks retreat (or other asset classes) retreat and the markets go down.

According to research reports from major bank analysts, many are expecting such pullbacks.

However, this is NOT saying it will happen 100%. Trust me, Wall Street analysts at times get things very RIGHT and other times very WRONG. No one has a magic ball…unless they are a 🧙🏻‍♂️ a la Harry Potter….hehe.

🙋🏻‍♀️ My view:

I have been saying for awhile in my posts that valuations are not matching fundamentals. This means that the price of certain asset classes or individual stocks, are not really in alignment with the core news/management/financials of the underlying company. There are technical variables that support this as well.

Although this can be a red flag 🚩 , there have been quite a few important reasons to this.

Such as:

  • YIELDS on other asset classes (like bonds) are historically LOW. So, as people search for yield (to make money), they pile into stocks.
  • STIMULUS due to Covid-19 measures – including the money pumped into global systems from central banks – have also helped give a boost to equities.
  • RETAIL (individuals such as each of us) has been piling into the Equity market more than ever and that buying power has had some BIG effect on the markets.

So, even though I’ve been wary of valuations, I’ve personally been putting a bit more money than usual into the markets last year & this year because of the above factors. Now, do I think we can have a market pullback before year end?

Yes, I do...but I will keep investing.

In fact, I will take advantage of market pullbacks to buy “the dip”.

We have to be realistic that one of the best places for us to build wealth is in the Financial Markets, including stocks. So, you can’t be scared of pullbacks as long as have a thoughtful & holistic strategy in place.

🌟 So, what’s my plan?🌟

1. DIVERSIFICATION – I am well diversified, this means the risk in my portfolio is well distributed in terms of country risk and asset classes (real estate, equities, bonds, crypto), and sectors (pharma, healthcare, tech, etc). So, if there is a pullback, I feel my portfolio can weather it quite well. *If you are NOT diversified and are heavily invested in one sector or asset class, change this. Remember, investing in ETF’s and index funds is GREAT but it does NOT equal diversification as many market-weighted indexes are heavily TECH influenced.

2. LONG-TERM VIEW – My money is 90% invested for the long-term – meaning 10yrs+. This means it can weather market ups & downs bc it has time to recover from pullbacks (if needed). *If you need money for short-term needs, honestly anything under 3yrs, be MINDFUL about your risk capital (money you invest).

3. STRATEGY – Every month, I put money into the markets using the dollar-cost averaging strategy. This means my money is invested in a way that averages my price exposure and market entries. *Do this friends, it makes the most sense. Never just put a big lump sum into the markets all at once.

4. TAX – Invest in Tax-Advantaged Accounts first (examples, 401K, IRA, ROTHs, HSA, ISA, etc). I always make sure that my investment strategy is thoughtful and takes TAXES into account. *We gotta pay taxes no matter what, but let’s be clever about it.

To highlight, NONE of the above information should be construed as financial advice. They are words from my heart and from my experience working for over two decades in global markets – both in Wall Street & the City in London.

Finally, if all this feels overwhelming – there are things you can do:

#1 – Book a Free 20 minute Discovery Call HERE, to see if I can help you on your journey to financial wellness.

#2 – Sign up to the Wait List for my Make Your Money Grow! group coaching program HERE.

#3 – Have a nice cup of coffee, tea, smoothie or something stronger. Take a pause, and then choose number one or two or just email me back. 😀

Wishing you a blessed rest of the week!

XOXO,

Anna

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Any questions regarding this post, please email us at info@wearyourmoneycrown.com

GET MY FREE GUIDE TO FINANCIAL HEALTH!

Download my Top Tips for Financial Health guide and start ruling your finances today!

GET THE GUIDE

I'm Financial Coach, NFEC-certified Financial Educator (CFEI), and café-con-leche fanatic with a passion to help CLOSE the gap in Financial Literacy through my business Wear Your Money Crown™.

HI, I'M ANNA!

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