Tag Archives: Anatomy of a Slowdown

April 2022 Financial Planning and Capital Market Review – By John Kvale CFA, CFP

Hello and Welcome to our April 2022 … Financial Planning and Capital Market Update!

If you are too busy to read, feel free to listen as we describe our post and thoughts in friendly podcast audio format as well as Video!

Newbies –

We like to articulate our thoughts and review on a Monthly basis our Financial Planning Tips, Capital Markets thoughts and current events!

Hope you enjoy!

April 2022 Video

YouTube

Financial Planning Tip(s)

Back to Basics Series – Educational Funding

In our continued fun “Back To Basics” Series here we discuss Educational Funding…

Here is one very important item to remember from the post:

Did you notice we put Retirement Planning BEFORE Education planning? Do you recall in Part 3 in Debt Planning we said one of the few good debts are educational related debts ….We of course are not advocating Student debt/loans… but they are available in abundance and again not a bad debt. There are not retirement planning loans…. just saying!

Proxy Vote Reminder

In this post we remind you to please reach out if you have fallen off the list for us to proxy vote for you!

If you are getting those pesky Proxy Notices (some can be small books- oh the trees that are destroyed- digressing) reach out to us, we not only vote the Proxies for you, but we get one single notice for everyone, and Jen has done an excellent job in getting a great deal of those electronically…. Did we say how Green this is?

Capital Market Comments

The Slowdown is Here

We first started speaking of the slowdown in our Q 1 2022 Newsletter here in our “Anatomy of a Slowdown” main aricle actually released in December of 2021….

And then again, here in our Q 2 2022 Newsletter ….

Then again here, here, here, here, and again here.… among a few other times…

Last week the BEA “Officially Released” a negative GDP print as noted here in our post and in this chart….

Never get the timing exactly, but we are not surprised and have been waiving the flag here in our talks and are prepared!

Have a Great Day, Talk to You at the End of May!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

Capital Market Thoughts – Anatomy of a Slowdown Continued – Snap Back Rallies During a Slowing –

With several excellent puzzled questions on the recent market movements last week and the final capture on similar questions of two buddies in my steps from the house Starbucks on Saturday early am … a post was in the works…

This post is an add on to our “Anatomy of a Slowdown” which we spoke about here in our Newsletter’s lead article and again here in our late January post …. but again with multiple excellent questions last week, we thought the additional comments timely…

Weird Snap Backs During a Slow Down

While no one knows for sure, but in if it looks like a duck and quacks like a duck it may be a duck form … for some reason snapback rallies of dramatic proportions are common during market attempts to gauge a slowdown.

Using our most recent dramatic slowdown as an example and please remember that was a very short and brief slowdown compared to the afore mentioned Anatomy articles…. the first snapback was 4.87% then the next at 5.87% and finally a 10.13% snapback…. yep over 10% …. see chart below – know it is busy but wanted to get all three big snapbacks measured…

For whatever reason … these occur frequently during slowdown periods and rarely of that magnitude during normal growth times.

These snapback rallies can ignore things like the worst unemployment report ever recorded (chart above) or even as of last week an invasion of a neighboring country…

Lot’s of theories, maybe some are correct, but in duck like fashion it just seems to happen…

Bottom line, using history as an example, the slowing probing and snapback moves are likely not over…

Stay cool, stay calm and ignore the dramatic headlines!

Have a Great “Snapback Analysis” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

Capital Market Thoughts … Reminder from Lead Newsletter Article of Q1 2022 … “Anatomy of a Slowdown”

With the gyrations of the Capital Markets as of late making headlines, we wanted to re-review our review (purposely a lot of reviewing…haha… ok digressing) of our lead article in our most recent Newsletter (Q1 2022) The Anatomy of a slowdown!

Here is a link to the Newsletter and my video explaining the lead article at the very beginning of the Video!

Anatomy of a Slowdown – Re Review

After large infusions of stimulus during the virus and associated lock downs, it should not come as a surprise that there would be a slowdown both economically and on an individual spending level as the stimulus subsided….

Capital Markets have sniffed this out and are trying to figure out the next speed of economic growth…

While Capital Markets and participants do their thing …. we wanted to remind ourselves and readers of a few facts from the Newsletter:

Those 10 years or more from retirement, should embrace the eventual slowdown and market reactions. This is the time you really get to make great purchases and shine in the future, but it may not feel like it at the time, Enjoy and Embrace! 

Those in the 10-5 year range from retirement, recall we adjust our risk level down as we get closer to retirement. Yes, that means taxes and a slower ride, but a lot less bumpy and less stress. 

Those 5 years out or already retired, as a slowdown occurs, and values drop, our most important item is to rebalance from the safe things that have held up in value, to the more risky items that have dropped in value (agnostic sell high and buy low), and of course remind ourselves we came into this with a good allocation for each and every one of us and can easily navigate this. 

The most important items we want to convey are that near the very end of a recession/slowdown, the headlines are the worst, but the rewards are the greatest. 

The average length of a recession is about 9-12 months, much longer than the most recent 2020 recession (-36%), and the Interest Rate Temper Tantrum slowdown of late 2018 (-19.9%) or the low Volatility (VIX) shake out of early 2018 (-12%) all shown here in the chart below! 

Final Thoughts to Remember:

  1. Investing is risky, and one will almost certainly have a drop in value during a slowdown/recession  
  1. Invest rationally when the sun is shining AKA Don’t get over your ski’s by keeping your allocations (safe/risky, Fixed income/Equity) correct during good times, thereby making it through the inevitable bad times  
  1. Reallocation from winning to losing areas is the most important item to capture the best part of a slowdown/recession, the eventual recovery 
  1. Ignore the headlines and remember they will likely be the worst near the end *Purposely Bolded for extra reminder! 
  1. Avoid false prophets, there will always be someone who has made a negative correct call, but most of the time that is not that someone’s first call, and they likely will overstay their welcome, once again missing the best part of the slowdown/recession, the recovery 
  1. Stay positive, and know our job is to help talk and guide you through these situations, just like we are now, by reminding and reviewing during sun shining times 

Have a Great “Re-review of Anatomy of a Recession” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents