Is my money safe? As expected, this is the number one question we have been getting from clients and prospects following the SVB collapse and banking crisis. So, where should we begin? Well for starters, it is certainly an unusual time in the economy, where we as humans never really thought about whether our money was safe in a traditional style bank account. Obviously when it comes to investing, we know there are plenty of risks involved, but now we are facing a new layer of risk with the banking system.

If this banking crisis has taught us one thing, it is the importance of making sure your funds are FDIC insured. So, only depositing $250,000 per FDIC-insured bank, or $500,000 total if you have a joint account. Being FDIC-insured means that the FDIC protects the money you as the depositor place into insured banks in the event of an insured-bank failure. So, while we had all thought bank failures were quite unlikely, leading some individuals to ignore the FDIC insured limit, given the recent news, make sure you are diversifying your banking institutions to remain within the insured-limits.

If you are a small business owner, the fall of SVB has now added another layer of risk to your business operations, requiring further due diligence on deposits and banking institutions. We know that this banking crisis is scary and causes doubt in the strength of the bank system, which is why we are here to recommend you to re-visit your cash management and seek advice from a financial professional. Given the economic uncertainty, now is a good time to ensure your cash is diversified and you are exploring alternative vehicles, including Treasury bonds, CDs, and money market accounts. If you have any questions or concerns about your cash given the banking crisis, email us at info@shermanwealth.com or schedule a complimentary intro call here.

 

 

Happy August everybody-crazy summer is almost over! As we head into the last month of summer, we want to take a moment to review what a month July was in the markets. As you can see in the chart below, we had a good start after July 4th, then came down and rocketed higher. On the week of July 15, after we had the CPI inflation data announced hotter than expected at 9.1%, the markets fell for two days following that news, but since then we’re pretty much up in a straight line from there with the NASDAQ leading the way at 11.35% to mark its best month in two years. We also saw the S&P500 hitting almost 8% and the Dow at 5.6%.

A lot of folks, of course, are calling this a bear market rally or some type of relief rally. Even with July’s strong numbers we are still down significantly year to date marking the worst first six months of the year since the 1970s. 

So will we see the rally continue into August? Or is this just a bear market rally? We will find out soon. A lot of what we found has been tied to interest rates. We see from this chart, mortgage rates completely rolling down to 5.3% as of last week, and the chart as high as 5.8%. Housing is obviously a huge part of the US economy, so many folks are worried about how this will impact their housing agendas, but we will continue to track it for you. 

Additionally, we saw Treasury yields slip and as you can see from here, the yield curve is inverted. Remember that means that short term rates are higher than long term rates. So you see the 10-Year Treasury rate down to 2.6% fallen from a high of 3.5% in the middle of June when the market was really at its lows, so a real massive rally in both bond price and market price with almost a 100 basis point drop there from 3.5% to 2.6%. 

So if you are in the market for a home, talk with your lender, see if you can get a lower rate. Of course, we’re also seeing people still in 0% interest rates on their FDIC insured savings at money center bank still earning zero, while we’re seeing high yield savings in the mid-1% range. And if you want to tie up the money for a bit longer, CDs are in the 2% to 3% range.

 

Next we want to talk about what we discussed in June, consumer sentiment, which is still close to all time lows, even though we saw a very, very slight uptick in the last reading. However, we want to hear from you- What are you feeling about the talks of a recession and such high inflation?  We’ve heard that the Federal Reserve will be hiking rates once again in their next meeting in September and probably in October. What are you doing differently in this type of environment? Where did your consumer sentiment fall in July? Let us know at info@shermanwealth.com. 

Do you have questions about the markets and skyrocketing inflation? Well, we’re here to break it down for you. We have officially entered a bear market in the S&P500. The markets have gone down 8.9% in the last three days, which is a historic figure. Friday’s consumer price index (CPI) report revealed that inflation was not as contained as investors had thought, leading to huge spikes in Treasury Yields, with the 10-year Treasury note up to 3.44%, hitting its highest level since 2011. The 2-year yield to 3.42%, and the 2- and 10-year yield inverted for the first time in quite some time. We also saw massive increases in mortgage rates. We will continue to monitor and ultimately see how these increases in rates will impact the consumer and the housing market, along with the dollar hitting 20-year highs. 

Due to the 4-decade high inflation numbers, all eyes are now on the Federal Reserve meeting tomorrow where they now anticipate to raise rates by 0.75%, the biggest rate hike in 28 years. Previously, Fed Chair Jerome Powell said that a 0.75% raise is off the table but with the CPI report from Friday, things seem to have changed. 

So, given this uncertain economic climate we are in, we want to make sure we discuss the timeliness of establishing a financial plan and getting organized. We wrote a recent blog that uncovered that many Americans do not have any sort of financial plan, which is worrisome during this time. For those of you who may be panicking about the market declines and volatility, along with the rapidly rising cost of living, you should consider re-visiting your financial plan as a whole, re-thinking your budget, asset allocation, cash flows, and overall goals. Whether you have a financial plan or not, it’s never a bad time to get started or updated to make sure you are on the right path and headed in the best direction. 

Have you automated your finances yet? With the great technology we have today, it’s so easy to aggregate your finances all in one place, so you have access to it at all times. Taking a look at everything you have and seeing the bigger picture will help you make smarter financial choices in uncertain times or economic downturns. At Sherman Wealth, we utilize state-of-the-art financial planning software that allows you to see your whole financial picture at your fingertips. If you would like to trial our financial software, email us at info@shermanwealth.com and we are happy to help.

We believe it’s important for all individuals to have a financial roadmap that will help them navigate murky waters as well as ride out the high times in order to achieve long-term financial success. We know that economic uncertainties in the market can be stressful, so we are here to help you through it. We will be following rates for you after tomorrow’s Fed meeting along with this hot inflation data. Stay tuned for more updates and let us know how we can help you with your personal financial situation. Email us at info@shermanwealth.com if you have any questions or schedule a 30-minute complimentary intro call here. 

What a wild start to the year it’s been with inflation surging, the Russia-Ukraine war, and the Federal Reserve rising interest rates. When the world and country faces economic events such as these, the markets, just like the consumer, digest and respond. So, let’s take a look at how some of these economic events have impacted not only the consumer, but the stock market as well.

As you probably already know, inflation has skyrocketed this year, having a large impact on the cost of living and pretty much everything, as you can see in the YoY CPI report charted below.

As we’ve watched inflation take off, we’ve been thinking a great deal about the consumer and what they have been seeing and feeling. Have you been spending more recently? If so, what areas are you spending more money on? Have higher gas prices impacted your interest in travel? The chart below shows consumer sentiment near all time lows, really depicting the effects that inflationary prices are having on individuals’ financial picture.

Are rising prices beginning to alter the way you spend your money? If so, we are here to help, so let us know if you would like for us to revisit your budget and financial plan during this time. 

For those of you who have been investing in the stock market, you may be feeling a sense of anxiety as the market has been extremely volatile in response to earnings season, rising interest rates, inflation, and more.

However, we want to show a zoomed out picture of stock market returns and pullbacks over time. At Sherman Wealth, we always emphasize the importance of time in the market instead of timing the market. As you can see in the J.P. Morgan slide on the right, time is your best friend. Try to remember to stay calm and think about your reason for investing in the first place along with your time horizon. If you are a long-term investor saving for retirement, take a close look at the overall returns and drawbacks overtime, as you have many years ahead of you for your money to grow. 

We know the past few months have weighed heavily on the economy; however, we urge you to stay calm. If you have any questions about the current market environment or your own specific financial portfolio, please let us know and we are happy to help. Email us at info@shermanwealth.com or schedule a complimentary 30-minute consultation here.  

Have you been feeling the impacts of inflation? I’m sure you have. The Labor Department reported on Wednesday that inflation rose 7% over the past year, the highest in 40 years! And on a monthly basis, they reported that CPI rose 0.5%. “The annual move was the fastest increase since June 1982 and comes amid a shortage of goods and workers and on the heels of unprecedented cash flowing through the U.S. economy from Congress and the Federal Reserve,” according to CNBC. Not only will this data continue to affect the prices of things we buy and purchase everyday, but it will also have a dramatic impact on interest rates and as we talked about last week, the 10-year treasury as well.

 

These inflation numbers are quite notable as they will affect aspects of life and personal finance dramatically, in contrast to the declining rate environment we have been in the past few years. Make sure you are understanding the impacts of the Federal Reserve increases and rising rates on your life and portfolio. If you have any questions about how these increases and economic data will affect your personal financial situation and smart financial moves to make, reach out to us at info@shermanwealth.com or schedule a 30-minute complimentary meeting here. 

 

As we end the second quarter, we want to take a look at where the U.S stock market is after this past year of ups and downs. Currently, the U.S. stock market is very stagnant on the outside, but industry analysts are discussing how it’s really bubbling underneath, more than it has in years. 

From the outside, the S&P looks very very quiet, more than it has been in some time, precisely 2017, according to a Wall Street Journal Article. In addition to that, we are seeing stocks at the highest prices since 2000s. Analysts are noting that it has to do with the recently trending short-squeeze stocks, such as GameStop, AMC, and Blackberry, inflating the stock market increasing prices all around. 

We are also seeing chatter around how the Federal Reserve has such strong power right now, in terms of controlling and affecting the stock market. It’s interesting to think about the reaction to such a small change from the Fed, allowing us think what type of reaction there will be if the Fed starts a normal rate hiking cycle and makes cash attractive again. We will continue to follow the news from the Fed and discuss how we think that will affect the economy and stocks. If you would like to discuss the market with us and let us know your thoughts, email us at info@shermanwealth.com .

 

As we approach the one-year mark since the coronavirus pandemic (COVID-19) began, we want to reflect on the year that the market has had. Its been quite a wild ride, especially in the past week or so, with the 10-year treasury yield hitting its highest level in one year, reaching 1.619%, to date. We have also seen a great deal of volatility in technology stocks, as they are currently down relative to the Dow Jones Industrial Average.

As we continue to see volatility a year into the pandemic, we want to stress knowing your timeframes, understanding volatility along with time in the market versus timing the market.

Below we have attached a chart from JP Morgan illustrating the difference in return if you were to miss the best days in the market. This chart will help you see the true understanding of sticking to your long term plan.  Check out the video below for Brad’s take on the market in detail, including tax implications, timing the market, and more. Let us know what you think and reach out to us with any questions at info@shermanwealth.com.

https://youtu.be/StB66SVXaIY