Navigating Through Market Uncertainty with Opposing Perspectives

When it comes to the financial markets, embracing diverse perspectives is crucial.  After all, it's not about having a singular focus; it's about understanding the larger picture.

More and more, when it comes to portfolio management, the ability to hold two competing or opposite views in your head at once is a requirement.

What's Next

2022 was challenging for many investors, with stocks and bonds facing significant headwinds.  It's easy to get swept up in the uncertainty and ask, "What's next?"

The honest answer is we don't know what is next.  However, here is what I believe.

• I believe things can worsen with the economy and the stock market.  Why?
  • Data shows that inflation, while it may be coming down, is still extraordinarily high. 
  • The Federal Reserve is on a mission to raise rates as high as it can to decrease demand/slow the economy to bring inflation down.
  • Corporations will likely see their earnings deteriorate by slowing growth or continuing higher costs they cannot pass on to their customers.
• I also believe in the long term that we will be better off than we are today.  Why?
  • People are motivated to provide a better life for their families.
  • The U.S. has one of the most innovative economies in the world.
  • Businesses will continue to earn more money and return more capital to their shareholders.

You see, depending on your time horizon, you can have two opposing ideas of where we are headed.  Portfolio management is always about risk management more than picking stocks.

As Howard Marks from Oaktree has stated, "the risk in investing doesn't come primarily from the economy, the companies, the securities, the stock certificates or the exchange buildings.  It comes from the behavior of the market participants.  So do most of the opportunities for exceptional returns."

If life transitions have you questioning your current level of risk, email me at pfenner@tammacapital.com or visit us at www.tammacapital.com.