Thoughts and musings from my desk to you.

Navigating Market Volatility: A Perspective for Investors

In recent times, we have witnessed significant market volatility that has understandably shaken the confidence of many investors. It’s important to acknowledge that while no one enjoys seeing periodic losses, these fluctuations serve a vital purpose in the marketplace.

Navigating Economic Cycles: Finding Stability Amidst Crisis

As we discern our crazy economic landscape, it’s important to reflect on the cyclicality of the crises that have shaped the U.S. economy over the decades. From rising energy prices in the 1970s to today’s concerns over tariffs, each period presented challenges and adaptation opportunities.

The Role of Misaligned Incentives in Economic Recessions

Fear of recession is causing current turmoil in stock prices. Recessions are often precipitated by an abrupt return to reality, a moment when the market corrects itself after a prolonged period of distorted perceptions and misaligned incentives. Historically, we have witnessed how such misalignments can lead to the mispricing of assets, which can ultimately culminate in significant economic downturns.

Recession and Volatility

For over two years, economists have been predicting a recession. As their timing has proven quite poor, recent market gains were built on the expectations that they were flat-out wrong. Proper perspective is that recent market profits provide ballast to endure all the downside the market can throw at us, rather than letting our risk tolerance ebb and flow. Long-time participants should have plenty of ballast by now. It is the recent new participants who might be victims of downside where they might not have a fair dose of time to build profits to then play with “house money”. This is why we are very slow and methodical with cash when given to us in large lumps. I have been recently squirming with a strong market and the half-cash positions of several clients who recently received life-changing amounts of cash from business sales and other events. It appears reprieve may have arrived.

Recession? Who Knows?

Economist Paul Samuelson famously quipped that “the stock market has predicted nine of the past five recessions.” This tongue-in-cheek expression reflected his view of jumpy stock investors’ impact on the market, who pile in and out, often letting fear win out over fact.

Current tea leaf readings might have one conclude that a recession is imminent, and that may be true. The bond market gives pretty reliable clues, an inverted yield curve among the most notable.

Segment Unveils Initiatives to Navigate Market Volatility

With almost 40 years of investing experience, Baumgarten is revealing how he applies keen knowledge and his eye for tracking the latest financial developments to Segment Wealth’s advisory practice.