It’s 3:00 pm, and I smell like a lit cigarette. My only offense was taking a 15-minute walk around the office park. The smoke from the Table Rock and Persimmon Ridge Wildfires has descended into our valley cloaking it in gritty, nasty unpleasantness. Farther north from us, however, the flames are a looming threat, and our thoughts and prayers are with everyone who is affected by as-of-yet uncontained fires. May God bless you and keep you.
I recall walking the Carrick Creek Loop in Table Rock State Park following Hurricane Helene and seeing the scores of downed trees every 15 to 20 feet across the creek and everywhere else along the ridges and slopes of the forest. The fallen trees foreshadowed the current damage that is unfolding before us as nature has a way of cleansing itself. The laws of nature would suggest that when there is oversupply, in this case far too much tinder on the ground, something will happen to bring things back to equilibrium.
It is true of the stock market as well. Just as a wildfire burns and clears the way for new forest growth in the future, a correction or temporary crash of the market allows the tension of high valuation and expectations to unwind and for the air to be released from the impossibly inflated balloon. When there is an overcrowded trade, such as in the mega-cap tech stocks, eventually there must be this unwinding, a right-sizing, a reckoning that clears the field of speculators, who must suffer some necessary losses, and allows for the return of optimism and achievable metrics. This is where we find ourselves, judging from the market action the last few weeks.
What is the proverbial wildfire? Uncertainty, and here again, an oversupply of it. This particular uncertainty has been caused mostly by the unknown effects of the installation of tariffs on the imports of different classes of foreign goods. How will it affect company earnings? What about Joe Schmoe, who just hopes his savings is enough to allow him to buy that 55-inch OLED TV to watch March Madness? There’s the uncertainty of the renewal of The Tax Cuts and Jobs Act which sunsets at the end of the year. Should all of us be saving a little more this year to handle next year’s tax burden? How about the possible resurgence of inflation? Are we about to return to that recurring grocery store nightmare? It’s all too much uncertainty mixed with too high valuations …
And that’s why we’re seeing the downdrafts we’re seeing now. The S&P 500 and the Nasdaq had rallied in recent days, but nothing had truly been resolved. We still don’t know the impact of tariffs and Trump affirmed that they would be going into place on April 2nd1. And because we won’t know them for awhile, it’s a good time to revisit the risks that you’re taking.
The bottom line is our Investment Committee does NOT believe we are out of the woods yet and this recent rally may be a bear flag. We met this morning and discussed a way we can Shield, Protect and Grow Your Wealth. It’s with our Wealth Shield system, and specifically with an ETF (Exchange-Traded Fund) that we’ve identified that will allow you to participate in the growth of the market up to a cap, with very little downside risk. Not only that, but it has 100% liquidity, meaning you could pull it all out if you wanted to in that first year or anytime thereafter, unlike say … a fixed indexed annuity that would cause you withdrawal charges within a 7 or 10-year time frame. And you can do all of this inside of your current Charles Schwab accounts!
The risks are heightened, both in our community and in the stock market. Adding some certainty to this formula right now would go a long, long way. There’s a lot of danger that comes with not being able to see the forest through the trees, whether we’re talking about spotting the wildfire just over the ridge or anticipating the next drop in your stocks. Let us create some certainty for you from all the uncertainty and protect your future in the process.
This is one of those moments that if you listen to us, we’ll change your financial world …
Sincerely,
The WTA Investment Committee
Sources:
1@TheKobeissiLetter
