It's been quite a Winter season with a couple real cold spells! I've had many clients spend extended time the past couple months in the warmer weather of Arizona and Florida, I'm happy for you! I hope for those of you who are ready to explore and travel again, that you've booked and go ahead and take those trips!
Just when we are coming out the challenging season of covid the next round of tragedy hits. The invasion of Ukraine is so devastating and affects us all in some way; of course, our thoughts, prayers, and our treasure (in terms of the U.S.A. financial support) goes out to the people - families caught in the middle. Since November 2021 the U.S. market(s) have been under strain largely based on domestic policy which has led to significant inflation (too much money supply), in turn - anticipated interest rate hikes, dislocations of employment, and of course war, and geopolitical pressures. These influences in part have led to several U.S. equity indexes touching correction-territory (as of March 7, 2022). Another issue is that bond prices have for the most part receded during the same time-period. Since the 'market' is forward-looking' it has 'baked-in' a likely Fed interest rate hike (FOMC meeting March 15-16, 2022); at the beginning of January 2022, the 10-year U.S. treasury yield was at 1.51%, by February 15, 2022, the yield had spike to 1.97% (stocks don't like higher rates), this is a 30% increase in yield in just 45-days; remember, interest rates and bond prices work inversely and therefore the underlying price of most bonds has dropped. As of March 7, 2022, the yield on the '10-year' is at 1.76%, this is likely due to equity positions being sold and moved into bonds. The term, "TINA" (There Is No Alternative) is a phrase that has again become popular. What this means to me is because over the past five to ten years most of the liquid marketable assets, such as stocks, bonds and commodities have been priced at historically high valuations and the increasing potential for corrections has at least for the near-term come to fruition.
What does this all mean? Well, in my opinion we must look at our own specific financial situation and evaluate if our current mix of holdings is in fact comfortable to us. I work hard to make sure we've wisely installed 'staged-income assets.' There has been volatility (fancy term for stocks going down) and we will likely be in this pattern for the near term. If you are in the distribution phase of life, do you have enough cash, money-market, fixed-accounts, to suffice your current 2022 and perhaps 2023 withdraw needs? If you are in the accumulation phase, are you comfortable seeing your IRA, 401(k)'s and other investments potentially go down over several quarters? Bottom-line, I want to sleep at night, and I want you to sleep at night. Many of us have been through similar investment cycles in the past, but I will never diminish your current thoughts and feelings of your own unique financial situation. I will continue to enhance the capabilities of Hattig Financial and our relationship, the HFC-team is here to serve you. I've spoken and met with many of you the past months and will be in continual communication over the coming months. I appreciate you and the relationship we have built.
On a lighter note... Portia and Asher are doing great! School at RCS has been very good for them this year and they stay active! Basketball and volleyball have wound down and now their baseball and softball seasons have begun. It is a lot of time and energy, but I know its worth it for them. We have been so blessed with a healthy family, great friends, a rock-solid church, and wonderful relationships with you. As I draw out of the minutia, I remind myself that we have made discerning decisions over the years, of course the near-term circumstances can feel uncomfortable, but I am assured that over the next be it, 10, 20, 30 years we will look back and say, "job well done." Thanks again for your relationship and we'll talk soon.
Josh Colossians 3:2
Thank you,
Joshua Hattig