The Weekly Update 8/09/2024  

        Written by Brittany Jarocki CFP, (Jim's business partner, daughter and the succession plan Jim hopes he never needs).    

If you were stopped at a stop light and waited for a minute before your turn to go, you wouldn’t think much of it. But if you were waiting for 10 minutes at the red light without any changes, you would assume that the signal is broken.

There are two key rules of thumb/signals when looking for recession indicators. The first one being if the Leading Economic Index, created by the Conference Board, falls for three consecutive months. The second being an inverted yield curve where the 2-year treasury yield is higher than the 10-year treasury yield.

As of now, The Leading economic index has seen steady decline since December 2021 without a recession materializing.

The yield curve has been inverted for 20 consecutive months with no signs of recession on the horizon.

Conclusion: These indicators aren’t working; they are the broken stop light. The economy has waited at the red light for many months expecting to see a recession, yet none has materialized. Thus, we must begin to assume the signals are broken.

While much of the greater investor population has sat at the red light waiting for it to either fall off the wire and crash to the ground or turn green, here at The Wealth Strategies Group we have proceeded forward with caution. We did our complete stop, looked in all directions, and continued driving.

The “stop and look in all directions before proceeding” strategy is supported by Jim’s Seven Signs of a Changing Economy analysis that he researches and writes each month, which allows us to understand the bigger economic picture and where we should expect the economy to be in the next 6-9 months. Turns out that these signals have been spot on. If we had solely looked at the two key signals and not the bigger picture, we would still be sitting at the stop light and missing out on positive market performance over the past several months.

I’m interested in your thoughts, comments, and observations.  Feel welcome to call, email, or stop by the office and say Hi.

Respectfully,

James O. Lunney, CFP®

CERTIFIED FINANCIAL PLANNER™ Professional  

Securities and advisory services offered through LPL Financial, a registered investment advisor. Member FINRA/SIPC. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.

All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested in directly. The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful. Stock investing includes risks, including fluctuating prices and loss of principal.

Asset allocation does not ensure a profit or protect against a loss.  Value investments can perform differently from the market as a whole.  They can remain undervalued by the market for long periods of time.