By Joe Smalley, Accredited Investment Fiduciary® & Professional Plan Consultant™
I love fall; it is my favorite time of year. To me fall is all about friends, family, football, and food. This year, it is also about the Fed.
The Federal Open Market Committee recently announced that they will not be raising interest rates this month. As we all know, in an effort to bolster the economy after the financial crisis, the Federal Reserve reduced rates to historically low levels and they have kept them low ever since. The good news is that the US economy continues to grow. Unemployment has fallen. Energy costs are low. All of that would lead folks to believe that now is a good time to begin increasing rates to get us back to a more normal setting.
But there are factors that make raising rates now difficult. The rest of the world is not doing as well as the US. Central banks overseas have recently lowered rates, and if the Fed raises rates here there would be a global tug-of-war. Many US-based companies sell their goods and services overseas, which means that they could be impacted negatively. And let’s not forget that with the recent global turmoil in China and Greece, the stock market has pulled back sharply.
And as much as I love this time of year, and even though the Fed is holding steady, the season does come with some turbulence. September and October historically are tough months to own stocks. And with the geopolitical events going on, this fall could turn out to be a bit challenging.
But there is a silver lining to this. Markets have recently come down almost 10% from the highs. If your time horizon is greater than 10 years, this turbulence may give us a good buying opportunity. Many good stocks are getting into bargain territory and if they get taken down another peg, could provide long-term investors with the chance to purchase them at favorable valuations. Some stocks even have dividend yields greater than the 10-year US Treasury.
With the volatility, now may be a good time to review your financial plan to make sure you are on track to meet your goals. We have some exciting new online tools to help us create, monitor, and implement customized and ongoing financial plans. Actress Diane Lane narrates an introductory video explaining our financial planning process, here. If you’d like to learn more, give us a call.
When you do call, you may speak with our newest employee. I am excited to announce that we have hired Nicole Powers-Heinig to be our Senior Registered Client Service Representative. Nicole has 18 years of experience in the financial services industry as a licensed assistant at Morgan Stanley and Wells Fargo before joining us. She will be supporting our Wealth Management division helping our clients with financial planning, asset management, and insurance. Be sure to say hello the next time you stop in.
Autumn is my favorite season. This year is no different. Our Spartans are off to a good start and our firm is growing. Here’s wishing you and your family a fantastic fall.
Joe Smalley is a financial advisor located at 213 East Saint Joseph, Lansing, Michigan, 48933. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at 517.487.4850 or at www.smalleyinvestments.com.