On January 28 of this year, I had a skiing accident in Jackson Hole, Wyoming that left me with a broken leg. My tibia plateau was broken badly. Apparently, this is a common skiing injury. The doctor that performed my surgery had done 61 of these surgeries last year in Jackson! He performed 3 the same day as he did mine. I got off my crutches about a month ago. While on crutches and in a good amount of pain and discomfort daily, it caused me to slow down and think out my day-to-day actions a bit more. Having a plan for the day, and even for the next couple of hours, enabled me to move less and be in less discomfort.
I began thinking more and more about how continual planning should affect one’s investment strategy. Specifically, what actions one might take now, to help with life in the future. Of course, every investor’s goals are different and everyone wants their investments to appreciate. I think the biggest decision an investor needs to consider and possibly adjust, is their exposure to any one asset type. Most investor’s risk tolerance is strong when stocks are up. U.S. stocks have been a wonderful investment over time. However, it is wise to continually assess your situation and make adjustments.
We may be coming into a period when interest rates finally began turning up and inflation plays a more prominent role in our lives. We have some proposed tax hikes that could affect the stock market as well. Right now is a prime time to think about your portfolio and make some adjustments. We have had a heck of a run off the Covid market lows of last year. Perhaps, most of the good economic and market news is already factored into stock prices.
Big- Cap Technology stocks have been exceptionally strong over the past several years. If we are indeed entering a time with rising rates and higher inflation, we may well see a rotation into stocks that would benefit more from this type of environment. Consumer Discretionary stocks and Financial names often tend to perform well in this type of environment. If one feels that their portfolio is positioned correctly as to the mix between fixed income and equities, now may be a time to focus more on stock names that very well may outperform under a different economic scenario.
