Recently I attended my first Commonwealth National Conference in nearly 5 years, with the conference theme being “Find the Good”. And after 40 years studying economics, investments, and financial planning trends I came back excited with pages of notes to incorporate into our work.
Recently investors have been ‘finding the good’ with various economic reports that suggest economic growth is slowing but not tanking. As I have mentioned before, bad news sometimes ends up as good news, and good news can be bad news. This seems to be the theme as we move towards the end of 2022 and into the new year.
For 2023 nearly every economic and investment forecast predicts a mild to moderate recession. And while this may seem important on the surface, following the pack is rarely right in my experience, all of which means 2023 will be very interesting. The financial markets give us signals of future economic results, and as such are always moving, many times in the opposite direction of consensus opinion.
How do we plan for the uncertainty? We begin with a solid investment base and remain disciplined in our approach, owning shares of large solid U.S. companies that pay cash dividend payments and have a demonstrated history of increasing these payments. We then reinvest the dividends into additional shares, compounding the total shares owned. It is a long-term strategy that has been proven successful over decades of uncertainty! We also carry that discipline into our daily financial lives, focusing on our personal plan and not comments we see or hear.
For the rest of the portfolio, we add a mix of diversification into other markets. Not all our decisions end up making money. Take for example our recent energy investments (oil and gasoline), which have declined for a variety of reasons, most notably another China Covid shutdown and a slowing U.S. economy. And while I have trimmed the positions, I am not willing to sell them completely until China is back at full strength. Add in the Russia/Ukraine war and the possibility of a harsh winter around the world and we may see a turnaround in energy prices.
In an ever-changing world filled with uncertainty, discipline is the hardest virtue to keep. In my opinion it is crucial to ‘finding the good’ for long term financial success. As always if you have questions, please reach out to me. Have a blessed holiday season filled with warm memories!
Securities offered through Commonwealth Financial Network, Member FINRA/SIPC. C F Parks Inc is a Registered Investment Adviser. Advisory services and fixed insurance products and services offered by C F Parks Inc are separate and unrelated to Commonwealth. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Past performance is no guarantee of future results. Talk to your financial advisor before making any investing decisions.