It Was Not in the Plan

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On a warm Sunday morning in late May, my young friend and I decided it would be a nice day for a hike. We chose Oyster Dome1 since it was less than an hour away, the hike was not very difficult nor steep, and we ‘should’ get a great view of San Juan Islands from the top. After the hike, it was not far to get a great cup of coffee in the Fairhaven District of Bellingham2. Chatting as we went up the trail, fog started rolling in and the temperature was dropping considerably. We noticed hikers coming down wet and cold – shivering in short-sleeve cotton shirts / shorts. We stopped, pulled out our rain clothes (no rain but the fog was that thick), drank some water and looked at our view – of the fog.

I had been in the Mountaineers3 for many years. Being prepared, having the 10 essentials on our trips, was drummed into our brains during every class and event that I attended. The number of times we have met people on ridiculously hot days with no water or without proper attire for the weather (as mentioned in the previous paragraph) has been many. The trail sign may say “2 or 3 miles” – but it is usually steeper than a flat road, the distance sometimes states only the one-way mileage, and a lot can happen in a more remote place. Here at White Raven Financial, we also try to be prepared for the ‘what ifs’ in our retirement plans. We address the ‘if’ of possibly needing long-term care, the ‘if’ of runaway inflation, the ‘if’ of extreme market volatility or higher tax rates, and various other ‘it could happen’ scenarios.

In mid-May, a news release for Consumer Price index4 showed that the index increased 4.2% over a 12-month period and 0.8% for the month; the largest month-over-month increase since June 2008. Preparation for inflation is hard to do and we have not read any instruction manuals on how to limit the impact. Usually, an inflation rate increase causes one’s dollar to lose buying power. To counter our caution, Reuter’s 5 noted that John Williams, from the NY Federal Reserve, commented that the Fed has the tools to respond if it (inflation) gets too high. Andrew Pease, Head of Global Investment Strategy for Russell Investments, stated in their Q2 Outlook6 that they don’t expect broad-based inflation pressures to emerge until 2023. They also felt that due to vaccines and the U.S. stimulus, the global economy is on track for a strong rebound in the 2nd half of 2021.

Similar to last month, global supply chains continue to be under pressure and appear to be clogged, according to Yahoo/Finance7 editor, Myles Udland. Mr. Udland further mentioned that recent data shows that in response to these shortages, prices are on the rise (aka inflation).  Jeffrey Kleintop, in a very recent Charles Schwab commentary8, also addressed the global shortage of raw materials which has been contributing to the recent surge in prices – which in turn caused supply chain bottlenecks. Mr. Kleintop expanded further on the raw material prices and commented on the pullback from early May’s high which could indicate improvement in the supply chains.

On Friday, May 28th, President Joe Biden’s administration unveiled its proposed budget9 for fiscal year 2022. In addition to the American Families Plan, there were many proposals that help address climate change. Here at White Raven Financial, we are ‘on board’ since Socially Responsible Investing in companies that address climate action is something we believe in.

May’s major indices were a bit like Seattle’s weather – it couldn’t make up its mind on if it should rain or have the sun brighten the day. The blue-chip barometer (the Dow)* decided on sunniness and posted a 1.93% gain. The S&P 500 (SPY)* was mostly cloudy, with a few bright days, and posted a 0.55% gain during the month of May. The tech-rich Nasdaq Composite (COMPTR)* decided on gloom and rain with a -1.53% drop for the month. (*After linking, click on Quarterly & Monthly Total Returns, “Monthly” tab.) On Tuesday, Mary 25th, the Dow Jones Indices released the latest S&P CoreLogic Case-Shiller10 report. The report showed that for the reporting month, home prices had again (is anyone surprised?) chosen to continue their increases with Seattle, for another month, being one of the top 3 areas. The March 20-city composite Home Price Index11 reported a 13.3% annual gain; up 1.3% from the previous month year-over-year posting. Before seasonal adjustments, month-over-month data had the month of March showing a 2.2% increase over the prior month of February for the 20-city composite index.

Regards and thank you (as always) for reading,

The Team at White Raven Financial

Advisory services offered through White Raven Financial Services, Inc. a Registered Investment Advisor in the State of Washington.

*Indexes are unmanaged and do not reflect service fees, commissions, or taxes. You cannot invest directly in an index. Past performance is not necessarily indicative of future results. Returns for the DOW, S&P 500 and the NASDAQ are the total return (price only) provided by Morningstar as May 31, 2021. Diversification and asset allocation do not assure or guarantee better performance and cannot eliminate the risk of investment loss.

*The Standard and Poor’s 500 is an unmanaged, capitalization weighted benchmark that tracks broad-based changes in the U.S. stock market. This index of 500 common stocks is comprised of 400 industrial, 20 transportation, 40 utility, and 40 financial companies representing major U.S. industry sectors. The index is calculated on a total return basis with dividends reinvested and is not available for direct investment.

*The Dow Jones Industrial Average covers 30 blue chip U.S. companies selected by the editors of the Wall Street Journal. The Dow represents about 25% of the NYSE market capitalization and less than 2% of NYSE issues.

*The NASDAQ is a market-value weighted index that measures all NASDAQ domestic and foreign common stocks.


Diane Jochimsen

Meet the Author:
Diane Jochimsen

Diane Jochimsen is the founder and lead financial advisor at White Raven Financial. Whether working on investment portfolios or with a financial plan, Diane always seeks to know more about clients’ values, aspirations, and end goals.

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