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You have millions of people working for you!

April 26, 2023   |   GuidePost

Today, we want to provide a brief market update and share a story we believe has the power to change how you view your investment portfolio.

Note: This video was published in our monthly client e-newsletter, Guidepost.

2023 Q2 Market Update

Both US and international stocks have recovered from their March lows when regulators took over Silicon Valley bank. In March, many experts acknowledged that Silicon Valley was an unusual situation. But the general public was fearful that other banks would run into serious trouble—a narrative hyped up in the media— which thankfully has not come to fruition.

In fact, the biggest US banks recently released first-quarter earnings that were really strong and beat analysts’ expectations! Smaller regional banks are still feeling the pinch of higher rates on their bond portfolios, though. The latest Fed meeting minutes showed that the banking situation is likely to slow economic growth because these smaller, regional banks may tighten lending standards to shore up their balance sheets.

Inflation is trending in the right direction. It’s been persistent and not moving down quite as fast as anyone would like, but it is continuing to slow. The consumer price index only increased 1/10th of a percent in March from the previous month and 5% from the previous year, down from an annual increase of 9% back in June of last year.

The labor market remains resilient, adding 236,000 jobs in March—bringing unemployment to a historically low level of 3.5%. But we are finally seeing job growth slowing, and job openings are coming down, which have been primary goals for the Fed in their efforts to bring inflation under control.

Gas prices, on the other hand, are on the rise lately, as refineries switch over to the “summer blend” and OPEC announced a surprise cut in production by 1 million barrels.

But at the end of the day, the Fed is still the key driver for the markets right now. While many expect them to raise rates again in their May meeting, it is speculated to be their last hike. The recession everyone has been predicting for years has not yet materialized.

The stock market’s reaction to all of this has been positive so far this year. As of the video recording on 4/20/23, the S&P 500 is up almost 8% (as measured by ticker SPY). International, developed country, stocks are doing even better and are up over 10% (as measured by ticker EFA). While not quite as high, intermediate-term government bonds are up almost 2.5% (as measured by ticker IEF), and real estate is just about breaking even (as measured by ticker VNQ).*

*Performance numbers will vary with market fluctuations. As of publishing this post on 4/26/23, SPY is up about 6%, EFA is up about 9%, IEF is up about 3%, and VNQ is down about 2.5%.

My conversation with Joe

Okay, so now that we’ve covered the markets, I want to tell you about that conversation I had recently with a client. We’ll call him Joe.

Joe and I were talking through the market updates I just shared with you. And over the course of our conversation, Joe confessed he has been feeling uneasy lately.

He opened up to me that, since he stopped working and started living off of his investments, he has felt at the mercy of whatever the stock market decides to do. Joe told me he felt like his financial future was completely up to chance at this point.

I told Joe, “Look, I get it! That is an understandable feeling!” There is a loss of control we ALL feel when we transition from a job where we’re earning our own income on our own effort, to passively living off our investments.

I reminded him how we’ve set up his investment strategy to mitigate risk while positioning for growth with things like meaningful diversity, low-cost mutual funds, matching up investments with withdraw needs, and his bucket strategy. These are all things we have talked about in Guidepost in the past too.

But I also asked Joe to ponder this:

Right now, all the employees of all the companies in your stock funds—which amounts to millions of people, working at the biggest and best companies around the whole world, are working for you day in and day out since you are an owner in their companies.

Remember, publicly traded companies’ primary objective is to earn money for their shareholders. This means, every day, every single employee at the companies you own inside your mutual funds is going to work for you, the shareholder!

They are motivated to sell their products or provide their services at a profit, for you.

They apply all their effort, education, and expertise to solve whatever challenges come up to make money for their company—all to make money for you.

Now, does this mean these companies will always succeed and that the value of your portfolio will always go up? No. But what this does mean is that your financial future is not simply left to chance.

As I reminded Joe about the people behind his portfolio, I saw his demeanor begin to shift and lighten.

So, whenever you look at your portfolio balance, remember this: you have the collective effort of millions of people behind it.

Yet, more significant than the work of these millions of people, Romans 8:28 reminds us that we have God’s work behind us. It says “…God works all things together for the good of those who love Him, who are called according to His purpose.”

I want to encourage you, having God’s work behind you is the most secure place to be.

 

Zak headshot portrait  Zak Lutz, CFP®, RLP®, CKA®
  LifeGuide Chief Investment Officer

The information provided does not constitute investment advice and it should not be relied on as such. It does not take into account any investor’s particular investment objectives, strategies, tax status, or investment horizon. All material has been obtained from sources believed to be reliable. There is no representation or warranty as to the accuracy of the information, and “LifeGuide Financial Advisors, LLC” shall have no liability for decisions based on such information. View and opinions are subject to change at any time based on market and other conditions. Investing involves risk including the risk of loss of principal. Past performance is not indicative of future results. Index returns are unmanaged and do not reflect the deduction of any fees or expenses. Index returns reflect all items of income, gain and loss, and the reinvestment of dividends and other income. Diversification does not ensure a profit or guarantee against loss.
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