The property had an obstacle during the winter months and early spring; it rains an average of 15.7 inches from October through May in the Pacific NW. With the rain, a seasonal drainage swale divided the north of the land from the south. Thus, wading through the water provided the only means of access to the south during the wet times of the year. The man, being taller and having higher boots, crossed without a problem. Now the woman? Wet feet are a given when the water is deep. Being the man he is, the man started building her a solid bridge; one that could allow her to drive a small tractor over if she so wished. Alas, when they started developing their property, they had a large red mark by the county development inspector for building a structure undefined in the county records. Many months later, with a development plan, a mitigation plan, a permit, and revised bridge supports; their little bridge received approval. So began the Stump Farm1, the property where our author Diane Jochimsen2 and her husband Mike Conner live, and White Raven Financial3 is located.
We do not build bridges here at White Raven Financial, instead we build Financial and Retirement Plans. Similar to bridges, Financial and Retirement Plans require a strong foundation to determine if a person or couple can live their lifetime in a comfortable manner The plan’s foundations include goals, dreams, values and expected lifetime of the recipient. Sometimes a plan requires an inputted cash flow review and possibly a ‘redo’ on the amounts of money that could be spent to allow a good outcome. The plan needs to be tested several times through a Monte Carlo simulation to validate that it will not break unexpectedly. Similar to the man in the preceding story, we do not take our work lightly; we would never wish to learn that your boots filled with water.
The federal reserve is diligently working on their plan to keep inflation at bay trying to ensure that our economy will run smoothly4. However, we read and hear the word recession multiple times a day. Liz Ann Sonders and Kevin Gordon, in a recent blog for Charles Schwab5, noted that due to the multiple factors of inflation, Federal Reserve rate-hike cycle and supply chain persistence, the risk of a recession has increased. Several days after reading their blog, ‘Just The News’ reported6 a Federal Reserve key economic indicator suggested that the U.S. may have officially entered recession territory. A contrarian thought to the preceding two articles was provided by WisdomTree’s 2022 Mid-Year Economic & Market Outlook 20227: They noted that even though there are clouds on the horizon, they expect economic growth will be positive for the full year with an estimate of 2%-3% growth. In their view, due to excess stimulus, the U.S. will not fall into a recession in 2022; that if it [a recession] does happen it most likely will be a self-fulfilling prophesy due to altered behavior out of fear.
Geopolitical uncertainty, surging inflation8 and supply problems appear to be affecting the Eurozone’s bridge to recovery. Andrew Pease, Russell Investments Global Head of Investment Strategy, noted in their Q3 Global Market Outlook9 that despite many obstacles, European economies have the potential to maintain trend-like economic growth provided energy prices remain subdued and a recession is avoided.
We realize many of you feel troubled with the market volatility and recession fears that are abounding. Although we stress risk tolerance and the long game, times like this are difficult. We found this interactive dashboard10 developed by Franklin Templeton on the anatomy of a Recession webpage. If you are interested in learning how the economy sometimes affects the markets, you may find the dashboard helpful.
The markets in June did not live up to a summer solstice; instead, they displayed winter vibes with an array of icicles suffering the worst first half in 50 years11. Of the three major indices, the blue-chip barometer (the DOW)* icicle length measured at -8.2% for the month. The S&P 500 (SPY)* notched longer with a -8.22% display. The tech-rich Nasdaq Composite (COMPTR)* fared no better and showed -8.71%. (*After linking, click on Quarterly & Monthly Total Returns, “Monthly” tab). On Tuesday, June 28th, the Dow Jones Indices released the latest S&P CoreLogic Case-Shiller13 report. The report showed that for the reporting month, home prices appeared to follow inflation and continued to increase. The April 20-city composite Home Price Index13 reported a 21.2% year-over-year gain; up 0.1% from the previous month year-over-year posting. Before seasonal adjustments, month-over-month data had the month of April showing a 2.3% increase over the prior month of March 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 June 30, 2022. 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.
Sources:
- https://stumpfarm.com/
- https://www.whiteravenfinancial.com
- https://www.thebalance.com/current-federal-reserve-interest-rates-4770718#:~:text=At%20its%20June%20meeting%2C%20the%20Federal%20Reserve%20announced,in%20March%2C%20marking%20the%20first%20increase%20since%202018.
- https://www.schwab.com/learn/story/signs-point-to-rising-recession-risk
- https://justthenews.com/nation/economy/key-federal-reserve-indicator-suggests-us-already-recession-territory
- https://www.wisdomtree.com/-/media/us-media-files/documents/resource-library/market-outlook/on-the-markets.pdf?utm_source=segment&utm_medium=email&utm_campaign=products&utm_content=midyear_outlook
- https://tradingeconomics.com/european-union/inflation-rate
- https://russellinvestments.com/us/global-market-outlook?utm_campaign=NA-AIS_22_06_GMO2022_Q3_E&utm_medium=email&utm_source=Eloqua&EloquaContactID=92550
- https://www.franklintempleton.com/insights/anatomy-of-a-recession?utm_campaign=us_sim-cbi-aor_ot-pwd_aor-sub-pwd-t3-rbi-em-seg&utm_source=dp&utm_medium=email&utm_term=O69963&mkt_tok=ODQ4LUlBUC05MzkAAAGE8dSSJ49FsLR2o_24fRkKSrmE_nUuL32k6C9Yh_GNCPwyoTnxExkL3Bq6HOfHPMxrmKs-vbcAcxNO-V7syvlw47_SI3YuDkkW-tFbyCLYO6A#interactivedashboard
- https://www.cnbc.com/2022/06/30/the-markets-worst-first-half-in-50-years-has-all-come-down-to-one-thing.html
- * https://Morningstar.com (index)
- https://www.prnewswire.com/news-releases/sp-corelogic-case-shiller-index-reports-annual-home-price-gain-of-20-4-301577041.html
· Dow Jones Industrial Average: -15.3% YTD
· S&P 500: -20.6% YTD
· S&P 400: -20.2% YTD
· Russell 2000: -23.9% YTD
· Nasdaq Composite: -29.5% YTD
