Monday Memo - October 18, 2021

I am starting a new Monday tradition, for all of our participants and advisers to share, the Monday Memo!

Every Monday, I will be writing about the economy, finance and anything that may affect how we advise our clients on how to manage their 401k or 403b plans.

So, please tell your friends, co-workers and family.

Also, please feel free to share this on your social media if you like the new format and information being provided.

Let’s talk about inflation!

Like it or not, inflation is here and it’s not going away for awhile.

Combine inflation with “supply chain” issues and we are going to have a volatile finish to the year.

Unless . . .

The supply chain issues get resolved quickly and are just a symptom of “restarting” the economy after the pandemic.

Inflation occurs when there is increased amounts of money trying to buy a limited amount of products. The only way a business can deal with increased demand (when they have limited output) is to increase prices. If they don’t, there will be shortages.

That’s Econ 101.

So, the question, for someone like me who advises people on how to invest their money, is . . .

Is inflation here to stay with us for a awhile or will it “normalize” after the “restart” of the economy?

Only time will provide us the answer.

The S&P 500, is the worst over?

The S&P 500 has been volatile for the past 30 days. And the next few days will be very important.

Why?

As you can see from the chart above, the S&P 500 index has just closed above it’s 50 Day Moving Average (the blue line) for the first time in about a month.

This is a “bullish” (good) sign if we are going to get higher market returns going into year end.

This could be the start of the next move upward, if the S&P can remain above this line for the next few days.

And this is one of the three factors I use in determining how much exposure we should have to equities in our Semi-Tactical models (which moved a portion of the money away from stocks and into cash on 9/20/21).

So, we may be getting the signal that we need to move money out of cash and back into stocks. That change could be made as early as this week, so if you (or your clients) are using our Semi-Tactical models, be sure to keep an eye on your emails.

Weekly Review:

I use Blackrock (the world’s largest asset manager with over $9.5T) to provide me with insights and research on how to create our Strategic models.

Every week they issue a Market Report which I will be sharing here.

So, if you are interested, you can read the same information that I am getting.

To read this week’s Market Commentary, click the button below.