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![]() ![]() He is a member of the Investments & Wealth Institute® and the CFA Society of Houston. He holds designations as a Certified Private Wealth Adviser®, Chartered Financial Analyst®, and Accredited Investment Fiduciary®. He graduated summa cum laude with a Bachelor of Science in Economics with a minor in Chemistry from Texas A&M University. Mike earned an MBA from the Harvard Graduate School of Business and completed an Executive Program in Portfolio Management at the University of Chicago. He is also an active venture investor with a focus on impact investing and social enterprises. Previous roles include president of a $6B investment management firm management consultant with McKinsey & Company VP of corporate finance & strategy with Compaq/HP and managing director of an entrepreneurial web-based business. His professional roles and community experiences give him a unique and real perspective into the needs of families, entrepreneurs, and business executives. With the founding of Kings Path Partners, Mike brings a diverse set of professional and personal experiences into the wealth services business. ![]() If you need help with a plan, contact us! If you can’t handle them, then you have the wrong plan. Your plan should contemplate market ups and downs. These happen too! Over the long term, markets have gone up so the negatives are clearly outweighed by the positives.įifth, there are numerous reports about the cost of missing the best days in the market (see this video from Dimensional Fund Advisors). Markets are very complex and dynamic.įourth, we tend to focus on negative surprises and not positive surprises. That is just the way markets have been and will be. Third, you have to accept that there will be surprises. 2020 has certainly demonstrated this with equity markets down over 20% and fixed income markets down about 20% as well. Second, the market doesn’t like surprises. Don’t put too much weight behind short-term forecasts. Even those who have access to the best information and the brightest minds find this task quite challenging. What do we make of this?įirst, it is very hard to forecast. This is a HUGE miss for the most accomplished bankers and economists of the day. And, the forecast for 2023 changed to over 4.5%. The end-of-year forecast for 2022 changed to over 4%. It is the rate of change and the surprise of change that have really hit the markets hard. In the context of history, 4% is not something to cause too much concern. In fact, since 1954 more than half the time, the rate has been higher than 4%. Current forecasts are for 4.5% to 4.75% by the end of the year. And more interest rate hikes are forecasted. As you can see below, rates have risen from near zero to over 3% in a rather short time. If the Fed wants to stimulate the economy, they lower rates in hopes of causing the opposite effect.Īs the US inflation rate continues to rise at over 8%, we are experiencing a period of increasing federal fund interest rates in an attempt to slow the US economy and reduce inflation. ![]() By doing so, it becomes more costly for banks to lend and thus slows the availability of money and the economy. The theory: when the FOMC wants to slow the economy or inflation, they raise rates. This rate is one of the most important interest rates in the US economy. The Federal Open Market Committee (FOMC) is the board that reviews economic data and sets the “federal funds rate,” which is the interest rate that depository institutions lend to other depository institutions overnight on an uncollateralized basis. It also acts as a lender of last resort during periods of economic crisis. Its core responsibilities include setting interest rates, managing the money supply, and regulating financial markets. central banking system-the Federal Reserve, or the Fed-is the most powerful economic institution in the United States, perhaps the world. ![]()
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