The Weekly Wealth of Knowledge is your download of this week's most important topics related to financial planning, the markets, and our community. October kicks off "breast cancer awareness" month, where we will be providing you content on how to get involved to support the continued battle against this horrible disease. This will include ways to give, get involved with advocacy, as well as ensure you are educated on how to carry the torch, not just in October, but throughout the year!
In this issue:
• Medicare Premiums To Drop (3 min read)
• Better Times Ahead (2 min read)
• Self Care For Caregivers (3 min read)
BONUS: Upcoming Cybersecurity Webinar - Register Today!
Medicare Premiums To Drop
A very timely article given our very well attended Medicare seminar last week, which emphasized the ongoing changes in the program and the importance of not having a set it and forget approach when it comes to individual plan selection. Read below to the scheduled changes regarding Medicare's standard monthly premium for Part B as well as the deductible.
Better Times Ahead
In the last several weeks, we have continued to face elevated uncertainty in financial markets due to high inflation and rising interest rates, and we thought it was an important time to take stock with the final quarter of 2022 just ahead.
It has been a difficult year, not only for investors but also for households and businesses as we all navigate higher prices and borrowing costs. There will be some challenges ahead for the economy as the Federal Reserve (Fed) continues to raise rates to control inflation. We believe the Fed is doing the right thing for the long-term health of the economy, but it does increase near-term economic risks.
Given these risks, we are receiving many questions about stagflation and concerns that we may again be facing the investment environment of the 1970s. But this is not your 1970s- style stagflation. While growth has stalled and inflation has been high, the unemployment rate has remained very low. The average unemployment rate during the stagflationary years in the 1970s and early 1980s was 6.7%, compared with just 3.7% in August of this year. Unemployment will move higher, but it’s likely to remain low by comparison, giving the economy more resilience than in the 1970s.
At the same time, inflation is decelerating. Gas prices and agricultural commodity prices, for example, have declined throughout this summer. Moreover, rents in some areas of the country are dropping, durable goods prices are declining, and many import prices are falling. When our central bankers are sufficiently convinced, the Fed can slow the pace of tightening as inflation moves closer to their long-run target. Some of the recent market volatility came from mixed inflation signals, so as the signals become more aligned, we expect volatility will fall and investor sentiment will improve.
That level of bearishness right now is very high, but it’s important to remember that historically extreme negative sentiment has often been followed by strong market performance. To take just one example, the American Association of Individual Investors (AAII) has been doing a weekly survey since the 1987. Last week’s survey had a level of bearishness seen only four other times before. S&P 500 returns a year later in those cases averaged over 30%. We don’t know whether that will happen again, but there’s still an important takeaway. As we experienced in 2020, when a lot of negative sentiment is being priced into markets, it may set the bar low for stocks to outperform expectations.
We also have some positive seasonal patterns ahead. November through April are historically strong months for equities. Stocks have also done well after mid-term elections. And the third year of the four-year presidential cycle (which we enter in 2023) has historically been the strongest for stocks.
The recent declines are concerning, and we can’t be certain when the volatility will end. But we do know that conditions continue to indicate that better times are ahead. Market volatility and negative sentiment can make it harder to make investing decisions, but we believe the surest path forward remains sound financial advice from experienced and dedicated professionals. As always, if you have any questions, do not hesitate to reach out.
Self Care For Caregivers
As we kick off "breast cancer awareness" month at MONECO, the first piece of content we have is in regards to the stresses caregivers can experience while taking care of a loved one, in addition to holding down a career. It is important to remember to still take the time to preserve your own physical and mental well being. Here are a few suggestions to help you or someone you know through the challenging process.
Cybersecurity Webinar - Aware & Prepared
Scammers target people of all demographics and often succeed because they catch people off guard. Good security habits and being aware of threats may help lessen the odds of becoming a victim and we are here to help. Join us on October 20th at 6:00 P.M. Be prepared to learn all you can do now, as we partner with MFS Investment Management for this exclusive webinar to prevent your cybersecurity from being compromised in the future.
The opinions voiced in this material are for general information only and are not intended to provide specific financial or tax advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
LPL Financial is not affiliated with MFS.
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.
References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.
All data is provided as of September 27, 2022.
Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities.
All index data from FactSet.
The Standard & Poor’s 500 Index (S&P500) is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
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