It doesn’t matter if I’m in an annual review meeting with a client or just making small talk with some friends. It seems that everyone is feeling a bit more tempered regarding the economy and their personal finances. The most recent report out of the University of Michigan indicates that consumer confidence has indeed decreased in recent months.
To say that it’s a challenge for investors to get excited in our current environment is an understatement. That’s especially the case if you think your employment may be on the bubble. Then there’s the government employee turmoil, skyrocketing egg and beef prices, ongoing military conflicts and the corporate uncertainty over tariffs. Is it any wonder that so many households are feeling apprehensive about their finances?
Let’s face it; it’s a risky time to be an investor. But then, there’s always been some form of risk. In today’s environment it’s a bit more difficult to assess.
There are various types of risk involved in investing, whether you’re in equities, bonds or alternatives. Plus, different types of equities have different degrees of risk. For instance, a domestic technology stock has a different upside and downside risk than a domestic blue chip or a foreign growth stock.
The sources for risk, unfortunately, are often out of your hands. Can you count on a company whose stock you own to keep improving earnings? Is the CEO about to resign? You just have to hope that any stock you own continues to deliver on the reasons you bought it.
But then there are external circumstances over which companies have little or no control. So, add “uncertainty” into the risk equation. You know what to expect when you study a balance sheet. But how and when is inflation going to affect your assets?
The income tax code is expiring at the end of the year. Will that affect your personal finances? And who can feel certain about the imposition of tariffs? How will that impact the rules of investing? Uncertainty is suddenly front and center in the investment arena. And when you invest with uncertainty, you are taking a risk.
All this being said, I’m not trying to spread fear. Nobody has a crystal ball. However, I can say that successful long-term investors know all about climbing the wall of worry and overcoming uncertain times. Some investors tend to procrastinate. Their plan is to wait and see; make their investment decisions when things settle down.
But study after study has shown that trying to time the markets is an exercise in futility. I’m not suggesting anyone invest blindly or recklessly, but I also don’t want investors to be paralyzed with total inaction because of uncertainty. For monies that are currently invested for the long term, now is the time to make certain all is in good order.
2025 could be one of those years that tests our resolve. That’s nothing new for experienced investors who know that patience and an iron stomach are part of being an investor.
Like it or not, the world is rapidly changing, bringing new challenges and opportunities. I’m confident that patient, long-term investors will be just fine. Because they know there could be moments of stress and that they will survive climbing that wall of worry.
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The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation. Comments concerning the past performance are not intended to be forward looking and should not be viewed as an indication of future results.