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“See Saw” Navigating the Ups and Downs in an Inflation Era
Written by Steve | Published: |
Earlier this week I saw this little toy from my daughter’s Barbie play house on the floor. I really had no idea what it was. I picked it up and asked my daughter what it was and in her cutest, almost two-year old voice said with conviction…
“See Saw!!!”
It caught me off guard, because I didn’t know she even knew that word at all.
She is in such a fun stage where she is surprising us everyday with what she is learning.
The cute factor is totally off the charts, but of course I am biased.
After she showed me how the “see saw” worked it made me think about how most investors are feeling right now.
They see their money go up, then down then up again only to be offset by inflation.
The markets have been a rollercoaster, with periods of substantial gains followed by sharp declines.
The net result is that we find ourselves in a similar position to where we started a few years ago.
This can be attributed to a variety of factors, including geopolitical events, changes in monetary policy, and shifts in investor sentiment.
One of the most significant factors influencing market performance has been inflation. Over the past few years, inflation rates have risen to levels not seen in decades. This increase in inflation has had a profound impact on both the equity and bond markets.
For equities, rising prices can squeeze profit margins and reduce consumer spending power, leading to lower earnings and, consequently, stock prices. On the other hand, bonds have faced challenges as higher inflation expectations lead to increased interest rates, causing bond prices to fall.
So my question to you is whether your current “buy-and-hold” strategy is outdated and should it be thrown out with old devices like palm pilots, walk-mans, and compact disc??
As you think about your current strategies, if you aren’t using a more tactical data driven model and coupled with the ratcheting power of indexing you might be left in the financial dust of those that do.
Just some food for thought over the weekend…
Oh and go try to find a playground and sit on a “See Saw” for a half hour or so and tell me how you feel afterward, ha ha.
