With steady winds on a great day, kite flying can be the most magical experience for anyone. The kite can fly for long periods of time if the wind is steady and the kite flier is calm. The wind, however, can become unpredictable and gusty if the flier panics and pulls back the line, the kite can quickly go from flying in the air to falling to the ground.
There have been some rough winds for the first quarter of 2023. With inflation, recession, and the banking crisis, the Fed has been navigating a balancing act by raising interest rates to bring down inflation in hopes of not triggering a US recession. A natural reaction for investors is the desire to want to pull back or sell as their portfolio declines. But as a kite flier knows, pulling back too hard and too fast on the line can likely crash a kite to the ground. In 2022, the rise of interest rates triggered a sell-off in stocks and other assets.1 The S&P 500 fell by more than 18% in 2022, making that the worst annual performance since the global financial crisis of 2008.2
In 2023 it remains unknown as to the impact on the economy and stock market after the shutdown of Silicon Valley Bank and First Republic, and also the recent collapse in the share prices of other regional banks resulting in the banking system clearly pulling back on lending.1
We’ve all heard the saying; “April showers, bring May flowers.” This can be a helpful reminder to investors facing a volatile market. Historically, markets recover and it’s important to remember to weather the storms of volatility. Matson Money Founder and CEO Mark Matson is unwavering in his message: “It is never the right time to panic.” Instead, remember that kites can soar in any climate and a downward turn does not necessarily mean destruction.
Similar to a successful day of kite flying, an opportunity to be a successful investor requires a prudent strategy. At Matson Money, we train and develop investors to create investing strategies based on empirically tested investing principles and coach them to stay disciplined over a lifetime.
It may sound like a lot to ensure that the kite stays in the air – but just as you can’t predict the weather 100% accurately, investors can’t predict the future or which stocks to choose or time the market. Because of this, it is important to know your desired risk tolerance, and invest in a portfolio that is rebalanced systematically to maintain that level of risk.
Typically, stocks tend to increase in value over the long run, although there are exceptions. Similarly, bonds are generally considered to be a safer investment option, but there are instances where this may not hold true. It’s important to keep in mind that there are no guarantees in financial markets, particularly over shorter time frames, which is why we also coach investors to invest for the long-term. “Invest for the next 20 years, not the next 20 minutes,” says Matson.
It’s not advisable to evaluate an investment thesis based on a mere one-year period. Investors who can exercise patience and maintain a prudently diversified portfolio, regardless of prevailing market conditions, are likely to reap the greatest potential rewards in the future. Just as some days have wind and others don’t, markets will inevitably go up and down. Investors who understand the investing process with a strong philosophy combined with a consistent investment strategy have an opportunity to generate long-term wealth creation.
Imagine another world of investing where you can discover what investing is, how it works, and how it can help fulfill on your purpose for life. The American Dream Experience is an encounter with clear, potentially life-altering truths about economics and investing. Enjoy a 2-day investing seminar training and developing yourself to have the knowledge and freedom for a long-term investing strategy which can create a possibility for peace of mind. We want to empower you to have the freedom to find steady winds and live your life on purpose.
This content is based on the views of Matson Money, Inc. This content is not to be considered investment advice and is not to be relied upon as the basis for entering into any transaction or advisory relationship or making any investment decision.
This content includes the opinions, beliefs, or viewpoints of Matson Money. All of Matson Money’s advisory services are marketed almost exclusively by either Solicitors or Co-Advisors. Both Co-Advisors and Solicitors are independent contractors, not employees or agents of Matson.
Other financial organizations may analyze investments and take a different approach to investing than that of Matson Money. All investing involves risks and costs. No investment strategy (including asset allocation and diversification strategies) can ensure peace of mind, guarantee profit, or protect against loss.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS
1. May Fed Meeting: FOMC raises rates, opens the door to pausing rate hikes. Retrieved May 8, 2023. https://www.forbes.com/advisor/investing/fomc-meeting-federal-reserve/
2. Pound, Jesse and Samantha Subin. Stocks fall to end Wall Street’s worst year since 2008, S&P 500 finishes 2022 down nearly 20%. CNBC. December 30, 2022. Retrieved May 15, 2023 from https://www.cnbc.com/2022/12/29/stock-market-futures-open-to-close-news.html.