The stock market zoomed higher with positive retails sales number going into the green over 17%. The Trump administration is also considering another stimulus package that would be in the ballpark of $1 trillion dollars and finally the Fed announced yesterday the buying of additional individual bonds which saw the market whiplash from being down big to up big at the end of the day. Mike Reeves, wealth management advisor of Strategic Wealth Designers joined the newscast to talk about how all these things affect the stock market in the near term and investor portfolios in the long term. He says the combination of the 3 stories coming out in the last 24 hours are a perfect storm for a market rally but is still hesitant to declare investors out of the woods completely. “For the first time in the history of the United States the Fed is buying individual bonds, we’ve never seen it before, Europe has had to do this and while for the markets here it’s a short term pop in the green, long term we don’t want to travel down the same path as Europe financially. Currently interest rates are low but if they go back up over time the Fed could encounter a significant loss on those purchases,” Reeves says.
With restrictions easing, people are able to get out and spend more freely at locations that were previously shuttered. The economy is in a fragile state but is showing signs of life with retail sales bouncing back in May. For the foreseeable future, the stock market is going to remain volatile based on how the Coronavirus develops or dies. Until a vaccine is developed there will be a portion of the population that will remain uncomfortable in public gatherings and large crowds will be not advised. Reeves said regardless of if you are a young investor with small 401K or someone near retirement with a million dollar portfolio, how you built your plan, if you built one at all will be the key factor. “If you are frustrated right now, feel like you can’t get ahead or ahold of the market, you’re right, you can’t… but what you can do is build a financial plan with safety in mind so that you limit your risk while still getting to enjoy some of the gains of the market when it goes up. Every age should be focused on financial planning for their future, it will save a lot of headaches during times like we are in now,” Reeves said.