“Headline risk is the possibility that a news story will adversely affect the price of an investment, such as a stock or commodity. Headline risk can also impact the performance of a specific sector or the entire stock market.” – Investopedia.com
In 1998, I was told by a very smart and successful investor that the market was going to crash because it was over-valued. (Or in other words the prices of stocks were too high). He was right, only the decline happened over 2 years later.
“Economist have predicted 7 of the last 3 recessions1.” – unknown
What does an investor do in the meantime? Stay in cash? Short the market hoping you don’t run out of money before your predictions come to fruition? Markets rise and fall all the time. Panic is not a strategy.
There are very large concerns as we have been discussing in this newsletter with the US economy. What do you see with the following chart2?
“Prediction is very difficult, especially about the future.” -Neils Bohr
“Declines from headlines and not from the actual economy or corporations profitability can be short lived.”
If you hadn’t noticed the S&P 500 saw a -10% pullback in January.
We are seeing declines due to Russian adventurism. Is this it? Is it all coming down? Ok, easy. You don’t panic your way to stock market gains.
Consider the 3 significant points:
1. The Feds dumped a lot of money into the economy, A lot!
2. Consumer demand is still high
3. GDP3 is still accelerating
But count on the headlines to cause market volatility. Russia vs Ukraine, a new Covid variant, trucker strikes, China does something mean, you get the picture.
We continue to recommend a review of the risk and income being employed in your portfolio and in most cases to move toward more income producing and non-stock market investments as part of a long-term retirement plan.
Social Security Hacks – Protection Against Scammers
A few weeks ago, we covered financial scams on our radio show called the Toro Bravo Retirement Income show. It runs on AM 940 NewsTalk on Saturday and Sunday Mornings from 8am – 9am and/or 10 AM-11 AM CST. (You see how I worked that in?)
If you get a call from someone saying they are from Social Security, hang up. Scammers are using unsolicited phone calls to scare you into either sharing information about yourself or to get you to make a payment to save your Social Security benefits.
Social Security will contact you through the mail. They use a standardized form to ruin your day and they will never call with threats or intimidation. SSA does not suspend anyone’s number.
If you do receive a letter asking you to contact the SSA, be careful of the number provided. Go to SSA.gov and look up how to contact the SSA. (The number is 1-800-772-1213 between 8am – 7pm Monday – Friday. Wait times are shorter Wednesday – Friday.)
For more information go to SSA.gov/fraud to read on Social Security fraud and how to protect yourself.
Sources Citations Bibliography:
⦁ Economist Joke
⦁ Chart is from SimpleVisor.com based on an article named “Market Pullback Or Bear Market?” – Lance Roberts 2/17/2022
⦁ Gross domestic product (GDP) is the total monetary or market value of all the finished goods and services produced within a country’s borders in a specific time period. As a broad measure of overall domestic production, it functions as a comprehensive scorecard of a given country’s economic health.
⦁ Large cap refers to a company with a market capitalization value of more than $10 billion. – Investopedia
⦁ S&P 500 Top 5 holdings are: Apple, Microsoft, Amazon, and Facebook. Russell 1000 value Top 5 holdings are: Berkshire Hathaway Inc, JP Morgan Chase, Johnson & Johnson, and UnitedHealth Group
Supplemental Disclaimers:
This article is informational only and is not investment advice. This is not an offer to buy, hold, or sell investments like securities or insurance products.
Securities and Investment Advisory Services are offered though Toro Bravo Investment Advisors, LLC. Life Insurance and Annuities sold as an insurance broker are not a fiduciary relationship and are not offered by Toro Bravo Investment Advisors, LLC.
Securities or Insurance are not FDIC/SIPC insured and investments contain risk plus could be subject to loss.
Losses could be short term or permanent. Numbers and figures illustrated are hypothetical in nature and past performance is not a guarantee or indication of future results/performance.
We are not affiliated with the Social Security Administration (SSA), Internal Revenue Service (IRS), or any Governmental Agency.
Do not rely solely on the Legal, Tax, or Financial information presented for it may not be suitable for your individual situation.
Consult your legal, tax, and/or financial professional before acting on any strategy or recommendation (i.e. major changes or before initiating the purchase, hold, or sale of any investment or investment strategy). Every individual’s strategy can differ depending on current circumstances and goals.