The emotional state of financial markets at this moment is as negative as it has been in decades. If you view any financial news show or internet page, you will find a lot of doom-and-gloom theories about the financial markets. Fear is a powerful emotion and it is often used to gain attention. After all, it is very easy to get concerned when it comes to finance.
What we are currently experiencing is a rising rate cycle but we believe we are nearing its completion. Around the world, rates have increased at record speed. In the U.S., we have seen rates increase over five per cent in just over one year. This has been done at a speed we have never seen before, signifying that the speed of markets and volatility has matched that pace.
This rapid rise has been larger than initially anticipated and has been the cause of some market volatility. The rapid pace has caught some companies off guard. Before all of this, we were riding a low interest rate environment, powering the market forward.
We often experience many emotions when it comes to investing money. We can easily get caught up in those feelings and make mistakes due to stress and fear. Below is a chart demonstrating the emotional cycles of market fluctuations.
What happens now?
We are nearing the end of the current rate cycle, this is typically where markets are under the most stress. The Federal Reserve is applying pressure and things stress under pressure. This does not mean the end of the financial markets, it means we are in an interest rate cycle.
We will continue to hold on to our strong assets and collect our stable income. When markets turn, the strong and financially sound assets will recover the fastest. Our markets move in cycles and, if you make good buys now, you will be rewarded later.
Navigating market cycles is an important part of managing wealth. We are confident in our tried-and-tested Smart Income strategy and it has shown to deliver results.
These markets bring opportunities and we will continue to optimize our portfolios in the meantime.
Tchabushnig Wealth Group.
This communication has been prepared by Alan Tchabushnig and expresses the opinions of the authors and not necessarily those of Raymond James Ltd. (RJL). Statistics, factual data and other information are from sources RJL believes to be reliable but their accuracy cannot be guaranteed. It is for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of securities. It is intended for distribution only in those jurisdictions where RJL and the author are registered. Securities-related products and services are offered through Raymond James Ltd., member - Canadian Investor Protection Fund. Insurance products and services are offered through Raymond James Financial Planning Ltd., which is not a member - Canadian Investor Protection Fund.