By Morgan Christen
CFA, CFP, CDFA, CEO and CIO
They say that all good things must end. Case in point: after a four-decade run, the Choco Taco recently met its demise. You may have remembered this treat when you were fine dining at your local Taco Bell. Created by Alan Drazen, a Philadelphia based Good Humor truck driver, back in 1983.
Why did he create the Taco? He wanted you to taste everything in every bite. When you eat an ice cream like a Drumstick, you have the nuts and chocolate on the top, but once you get to the cone, it is just ice cream and cone. Alan thought the shape of a taco was the perfect vessel to enjoy the nuts, ice cream and chocolate in every bite.
The free-lunch, zero-interest rate economy is also going the way of the Choco Taco. Corporations, investors and homeowners had the perfect bite. A very accommodative Fed created the perfect economic taco. Need to expand your business or buy a house? Nutty low rates.
Then Covid hit and the government doled out money directly to individuals and corporations. The cash sugar high kept them spending. And now that is over. Frankly, all that sugar was going to our hips.
Now, two years removed from the Covid recession, we have experienced two quarters of negative GDP. That would usually signal a recession, although the National Bureau of Economic Research (NBER) would need to officially state a recession is here.
The stock market has traditionally sold off ahead of a recession and recovered before the economy. Please see chart. The takeaway, a recession is not the time to sell.
Staying invested has been a great way to position you for the recovery. If your risk tolerance and timeline remain the same, staying invested is your best course of action.
Trying to sit the market out for the volatility to subside is not a successful plan.
We have found that, although it is painful to watch your portfolio drop, investors feel more pain when the markets rebounds and they are sitting in idle cash.
We often talk about the ABCs of investing. A-Asset Allocation. B-Behavior (how you react). C-Costs. A sound investment plan incorporates a plan, a well-designed low-cost portfolio and an advisor. These are the keys to success in these rough markets.
Things come and go and evolve. Although many may lament the loss of the Choco Taco, I would imagine it has been years since they splurged on that calorie ridden beast. The same can be said for the zero-interest rate regime. It felt good going down, but not good for our long-term health.
We thank you for your continued support and look forward to speaking with you soon.
The information contained herein is based on internal research derived from various sources and does not purport to be statements of all material facts relating to the securities mentioned. The information contained herein, while not guaranteed as to the accuracy or completeness, has been obtained from sources we believe to be reliable. Opinions expressed herein are subject to change without notice.