Climbing The “Wall of Worry”

There’s a lot going on in the world right now. I almost cringe when I hear myself say that, because it is, quite literally, always true. And the financial media is beginning to recycle one of their favorite terms – climbing the “wall of worry.”

Originally I was going to write about the $3.5 trillion budget deal or what to do with any child tax credits that may be heading your way. But then global markets began jolting on fears of new viral variants, inflation, taxes, etc…

Is the sky actually falling (again)?

Could a big correction happen?

Climbing The "Wall of Worry"

After hitting record highs, markets tumbled last week sending the Dow 700+ points lower. Now, stocks have since recovered those losses but the fear is still there.

Why?

Mostly fears of a COVID-19 resurgence caused by the delta variant that could derail the economic recovery.

Case numbers are rising globally, even in countries with high vaccination rates, and the surge could lead to a return to travel restrictions and business closures.

Could these market jitters cause a 10%+ correction?

Absolutely. But, predicting this is nonsense.

Should we panic and freak out?

Definitely not.

Here are a few reasons why:

Summer months can bring higher volatility, perhaps because of lower trading volume, making bad news shake the market harder.

We’ve had a pretty long winning streak, and corrections are part and parcel of a healthy market, especially when we’re near all-time highs.

New variants and higher case counts are a threat. However, vaccination rates are continuing to rise, and experts don’t think that we’ll see the devastating health outcomes we saw last year.

It’s also always important to remember this – the financial media is not your friend. Their objective is not to inform you, it’s to scare you. Fear sells. I know that can sometimes be hard to accept, but keep it in the back of your mind as you return from summer vacation and the fall news cycle ramps up. Get ready for the “wall of worry.”

Could the delta variant cause the economy to slow down?

It’s hard to say at this point. The rosy projections about the economy have been based on a swift return to normal from the shortest recession in history. If surging case counts cause a resumption of business and travel limits, we could definitely see a hit, especially in recovery-dependent industries like airlines, cruises, and hotels.

Supply chain issues are still causing materials shortages, creating delivery delays of goods, and potentially triggering slowdowns in industries such as building and construction. However, consumer spending is still very strong and the economy is in way better shape than it was last year.

Bottom line: we could see some economic complications due to the delta variant and we’re likely to see more market volatility ahead, especially if economic data disappoints.

We’re keeping an eagle eye on the trends and will be in touch as things evolve.

I hope you are enjoying your summer…go back to it! This is nothing to worry about now.

 

This entry was posted in Blog, Investing, Market Commentary by Mike Minter. Bookmark the permalink.

About Mike Minter

Mike develops investment portfolio allocations, handles trading and rebalancing, and conducts research and analysis as a Portfolio Manager and Financial Advisor for the firm. As a perpetual student of investing and the markets, Mike considers himself obsessed with the subject. Mike has earned the CERTIFIED FINANCIAL PLANNER™ (CFP®) and Certified Fund Specialist® designations. He is also an active member of the Houston chapter of the Financial Planning Association (FPA).   Read Mike's Profile HereRead More Articles by Mike

Mike Minter

Mike develops investment portfolio allocations, handles trading and rebalancing, and conducts research and analysis as a Portfolio Manager and Financial Advisor for the firm. As a perpetual student of investing and the markets, Mike considers himself obsessed with the subject. Mike has earned the CERTIFIED FINANCIAL PLANNER™ (CFP®) and Certified Fund Specialist® designations. He is also an active member of the Houston chapter of the Financial Planning Association (FPA).

Read Mike's Profile HereRead More Articles by Mike

Related Posts