Financial Strategies

Opinion: Watch marketplace to invest appropriately


Summer is coming to an end. The kids are going back to school, and we feel the year slipping away. We are well into the third quarter, and many investors are amazed at how resilient the stock market has been. This tends to cause some to worry about what is yet to come.

My readers know by now that when I write about investing, it is in the context of your financial plan. This allows you to focus on your dreams and fears and ignore the vast amount of media hype that could concern you. Still, the economic environment impacts us all, and uncertainty can bring indecision if we lose our focus.

Our mid-year economic outlook was recently posted, and this information can help calm some investor fears and provide guidance. Your advisor is trained to help you navigate economic changes as well as help you take advantage of certain opportunities.

Our Chief Economist Bill Greiner states that the first half of the year, we had real GDP (Gross Domestic Product) growth of 6.5%, but inflation also is on the rise and could increase to 3.5%. We are looking for a more comprehensive reopening of the economy to support this growth as well.

The investment outlook based on fundamentals remains positive. This includes economic and earnings trends, Fed policy and interest rates. Valuations that measure how expensive stocks are remain neutral with a positive dividend yield when compared to interest rates. The technical price trends are also positive. In addition to these metrics, we also like to keep a list of the current “Wall of Worry” items to help keep investors’ perspectives in line.

It appears that investors worry more about the headlines such as: new strains of coronavirus; inflation; fiscal and monetary policy; peak economic data and regulatory risks. What we advisors are watching is deeper than just the recent headlines. We monitor: economic growth; employment; corporate earnings; and interest rates. The wild cards are geopolitical risks in Russia, China and Iran.¹ We consider these types of risks by how much probability there is for a negative occurrence and how much it affects our markets.

So, how do you build a portfolio around these concerns and economic backdrop? First, review your financial plan, time frame, needs and wants with your advisor. Make sure you have proper diversification and not too much overlap. Then, seek the right amount of income and growth for your situation and design a strategy to manage tax efficiency and risk. Now it is time to implement this custom portfolio and watch the marketplace to invest appropriately.

You can also review forward-looking trends to help determine where the next opportunity might be and consider working with your advisor on whether it makes sense for you to invest a portion of the portfolio for the future. Once you have a solid plan in place, headlines will be a small part of your concerns. You will be able to focus on improving your situation and perhaps even start building a legacy.

1: Mariner Wealth Advisors Crystal Ball

Patricia Kummer has been a Certified Financial Planner professional and a fiduciary for over 35 years and is Managing Director for Mariner Wealth Advisors, an SEC Registered Investment Adviser.


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