It seems equity market instability is taking over financial headlines again.
With a trade war taking shape between the U.S. and a good portion of the rest of the industrialized world, analysts are once again reaching for—if not yet raising—their red flags.
Market Watch recently featured this eyebrow-raising headline: “The Dow and S&P 500 are 10 trading days away from their longest corrections since 1984.” The tariffs have spooked many industrial companies, as well as automakers. The market is flip flopping all over the place.”
Barron’s unique take on this hot topic centered around legendary market technician Ralph Acampora, who is a pioneer in the field of chart-based trading.
Barron’s said Acampora “is growing increasingly concerned about recent moves in the stock market, notably in the Dow Jones Industrial Average.” They added that “the primary utility of reading charts is a ‘risk management’ function, and what he’s observing currently suggests that the bullish dynamic in equities may be unraveling.”
When Donald Trump’s top economic adviser stated that the President was “not retreating” in his approach to trade with China, the world took note.
According to TheStreet.com, with “the U.S. Treasury yield curve showing persistent signs of a slowdown, copper prices falling to a three-month low and oil rising to the highest in nearly four years, investors appear increasingly concerned that the global equity market rally may have run its course.”
Also weighing in on the topic was the European Central Bank.
In its monthly economic bulletin, the ECB reported: “The near-term prospects of greater trade protectionism have increased, which could have a significant impact on global activity and trade. Other downside risks relate to the possibility of a further tightening of global financial conditions, disruptions associated with China’s reform process and geopolitical uncertainties associated, in particular, with Brexit-related risks.”
What Are the Economic Indicators Telling Us?
Market Watch reports that growth in the U.S. economy in the first quarter was trimmed to 2% from 2.2%.
Largely reflecting lower spending on healthcare and a “somewhat smaller buildup in inventories, it could be another reason for investors to feel cautious,” Market Watch reported.
“Market participants have grown increasingly concerned that the economy could be in the late stage of the economic cycle, and this year has seen a sharp drop in the number of fund managers who expect the economy to be stronger in a year’s time.”
What Does This Mean for Asset Protection?
“Unraveling.” “Flip flopping.” “Longest correction since 1984.” Not the most comforting phrases to people who have built up wealth by working hard, investing well, and shoring up their savings.
There are as many predictions on if and when the markets might veer into serious correction territory as there are analysts qualified to make predictions. So, what is someone who is nearing or planning for retirement supposed to think or—better yet—do?
The first order of business — among many in retirement planning — can be preserving what you already have. Ask yourself – how many more market corrections can you feasibly come back from at this stage in your career and life? One? None? Another question you can ask is, “Are there ways to minimize my market risk?”
These questions and how we answer them will be different for everyone. And so will the strategies that each person uses to ultimately get to the finish line. But as well-respected economist Robert Ibbotson has noted – retirement is time for more “de-risking.”
Sequence-of-returns risk is a real threat for early-year retirees and working-age adults. So, we should consider strategies of how we will manage that risk, especially as we enter the golden years.
Making the Most of Your Risk Management Strategies
According to an article on USNews.com, retirees should take action before they face a market decline they can’t recover from.
Staff writer and published author Emily Brandon writes: “A steep drop in the stock market can be particularly devastating to retirees, who have few options to replace their depleted life savings.” One opportunity is to find strategies that ensure your income needs continue to be met, regardless of market conditions.
Knowing where you stand in the face of market uncertainty is step one. H.F. Hanes & Associates can help you evaluate your retirement assets and determine if there are options available to help you protect against market risk. We can also assist you with creating strategies against the many other financial risks retirees face as they enter retirement.
If you are ready for personal guidance, we are ready to help you chart a safe path to retirement success. Contact us at 480-607-1346 or 888-416-5433 (LIFE) to schedule a time to discuss your financial situation.