By Bob Barber, CWS®, CKA®
What’s causing the turbulence in the markets?
- The Ukraine Russia War, fear of escalation, and possibly the use of nuclear hypersonic missiles
- Record High Inflation from too much government stimulus
- Fears of what higher interest rates and a tighter money supply could do
- The Real Estate bubble
- Political leaders that seem incompetent when doing their job
- Computer Chip shortages for manufacturing, especially for vehicles which is the second-largest purchase most people make behind buying a home, and its very noticeable
- Continued Supply Chain disruptions from leftover Covid
- A shortage of workers to fill needed vital positions in the marketplace even with unemployment at record lows
How should you invest in a time like this?
- Invest in companies we all need to survive a normal lifestyle. For example, ones that produce food, clothing, shelter, technology, energy/utilities, healthcare, transportation, etc.
- Use a well thought out, long term investment strategy
- Understand that turbulent times are nothing new, and they will always come along every 2-3 years.
- Keep emotions and feelings out of investing.
- Be leary of professional doomsayers who make a living from selling fear. They take advantage of people during turbulent times by selling high commission products like gold and silver, high fee indexed annuities, or even a subscription-based newsletter you have to subscribe to. These professional doomsayers are all over social media, the internet, television, and even mail out thousands of seminar invitations offering a free steak dinner to lure you in. Those seminars cost them thousands of dollars, but just the sale of 1-2 high commission annuities makes up for it to the people doing this.
- Look for investment opportunities instead of running from them.
- Stay cautious of the tendency to chase returns. During turbulent times something will always be way up when everything else is down. Be careful of buying high.
- Stay patient. Stay patient. Stay patient. It is not a time to panic!
- Think long term in 3-10 year increments verses 3-24 month increments
- Seek experienced investment counsel from someone that has been through several turbulent times many times before. This may mean someone older than you.
In my life alone I have seen: the Vietnam War; Watergate; President Nixon’s resignation before he was impeached; the oil embargo where just getting a gallon of gas for your car was nearly impossible; President Carter’s years of double-digit inflation; Black Monday and the stock market crash in October of 1987; the collapse of the Real Estate markets in the late 1980’s that lasted for many years; the internet bubble crash of the early 2000’s; the real estate crash again in 2008; and the temporary market crash from COVID just a few years ago.
Realize that Turbulent times are a normal part of life, but investing and staying invested during them can be difficult if you’re doing it alone, so DON’T!