NEW YORK — The recent market volatility at Wall Street followed by the Federal Reserve Bank announcement of increased federal funds rate days before Christmas of 2018 shook the equity market that affected trading all over the globe. Short sellers buying in and out of the market during a day’s trading destabilized every closing day, thereby sending panic attacks among investors, especially retirees whose pension funds and retirement accounts depend on the financial market.
For the first time in 50 years, the most awaited “Santa Claus rally” did not materialize. Usually, the end of December posts up to double digit gains for the stock market because this is the time when people celebrate, travel for holidays, spend money to buy major gifts, new cars and even wedding plans. Technology stocks, in the past, ruled with most people thinking of buying a new gadget, high tech toys, robotics, using services from leading providers like Amazon, Netflix and Google (Alphabet).
Is this the beginning of a bear market? Most people believe that the end of almost 10 years of bull market is over, that we are heading to a dreaded recession. This is the time when investment advisers talk to their clients to go back to the basics of financial planning to determine suitability for every person, regardless of age, even before buying a particular financial investment. The rules have changed with life span getting longer, the baby-boomers today are more bullish than ever to grow their wealth.
The good news is, United States GDP expanded 3.5% in the third quarter and is expected to grow by more than 3% last quarter, on the tail winds of 2018 Tax Cuts fiscal stimulus. The unemployment rate is 3.7%, the lowest level in 50 years. Nonfarm payroll growth has slowed recently but remains healthy at over 150k jobs per month. Wages are increasing at 3.1%, the highest level in over a decade. Overall inflation remains muted, near 2% and consumer confidence remains high with consumer spending, which drives 2/3 of the US GDP that remains robust. These are enough reasons to keep invested.
There are strategies to be learned on how to weather market volatility, such as avoiding market timing, keeping expectations realistic, looking forward to a long-term investing, diversification of assets and really understanding what you are investing in. For the inexperienced investor, a lot of these Wall Street terminologies are all too foreign. Because of this demand for knowledge, a step by step process of understanding the financial market is now available for free download, this Friday and Saturday (Jan 11-12) at Amazon. Follow this link: https://www.amazon.com/dp/B07JGRD62H
ABCs of Investing for Gen XYZis written by Carol Tanjutco (disclosure: Inquirer correspondent), a New York registered Investment Adviser holding US securities licenses and admitted to Philippine Bar and CPA Board. The book starts from the basics of savings from early on, understanding the value of a dollar and how it multiplies based on Rule of 72 in investing. The ABCs of mutual funds, technical words and lingo used by stock brokers are explained.
The book further explores a variety of financial investments including bonds, stocks from small cap to medium and large cap, cryptocurrencies, derivatives such as ETFs, and how to determine which investment is good for you based on your financial goals, time frame, experience, liquidity and suitability. Discussions about retirement, case studies and estate planning are included to complete a wholistic plan. Published by non-profit; check for more days of free promo at ABCofinvesting.com .
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