Inflation. Interest rates. Geopolitical conflict. An ongoing pandemic. The list goes on, but the fact remains: We’re all experiencing disruption. The economy and markets are not immune to this. Over the past couple of years, the markets have been continually buffeted by a variety of turbulent and erratic forces. And
So how can one navigate market fluctuations? Taking an active role and long-term view of your financial goals is a good place to start. If you know the purpose of your investments and understand your
We follow this same active, long-term philosophy when it comes to managing client assets at Thrivent. Our team of more than 130 investment professionals have a constant eye on the markets and economy. Our portfolio managers actively track corporate earnings, the economy, trends and market forces to guide the selection of stocks and bonds to create well-diversified portfolios, adjusting allocations for current market conditions.
Our team of more than 130 investment professionals have a constant eye on the markets and economy.
We can see how this plays out in our current environment. An active management approach could discern that rising inflation would require the Federal Reserve get serious about raising interest rates. The active manager could then take actions to position a portfolio to stocks less sensitive to higher rates and inflation and shorter duration fixed income, such as bonds or loans with floating rates.
Additionally, an active manager would likely recognize that the companies that benefited from pandemic “stay-at-home” characteristics (like streaming services) might reverse as the economy opens up and people shift to spending on services and experiences outside the home.
Finally, an active manager can recognize when markets are becoming too narrow and concentrated and then can hedge against it. For example, the market bid up the large cap technology companies, they became a significant weighting in the market indexes. When that happens, it increases the risk of a significant reversal because when the market shifts, everyone rushes for the exits and that exacerbates the downward pressure on these companies. An active management approach takes all these factors into account and makes informed investment decisions.
Market volatility can be unsettling. Now is a perfect time to meet with your financial professional to help you determine your investment risk tolerance and make any adjustments to your financial strategy to help you achieve financial clarity and reach your long-term goals in life.
Author Steve Lowe is vice president and chief investment strategist at Thrivent.