You Can Grow Your Wealth Even When the Market Crashes

You Can Grow Your Wealth Even When the Market Crashes by Jocelynn Smith – Banyan Hill

Everything is coming up roses!

The government announced today that second-quarter gross domestic product (GDP) growth came in at 2.6%, up from the first quarter’s weak growth of only 1.2%. Consumer spending — up 2.8% — was the biggest supporter of last quarter’s growth, as Americans shelled out more money for groceries, clothing and health care. The third quarter’s GDP growth is expected to come in at 2.7%.

The economy has expanded for eight straight years and added more than 16 million new jobs. The headline unemployment rate is resting near 16-year lows. Amazon even recently announced a “Jobs Day” next week, where it is planning to hire 50,000 people to fill its new warehouses.

Everything seems to be humming along just perfectly, and that’s got me nervous, because we’re heading straight into a few bumps in the road that could significantly derail the stock market.

Are You Ready?

We’ve all seen it. Stocks don’t go up in a straight line. There are corrections, black swans, deflating bubbles and then, of course, there’s just a good, old-fashioned accounting scandal. I was still in my early trading years when the great Enron scandal (2001) and the WorldCom scandal (2002) hammered the market. All of which was preceded by the dot-com bubble popping.

Watching the stock market implode day after day for a few years might explain why I tend to be more of a skeptic when it comes to stocks.

And when everything is looking just perfect — see the data I listed earlier — I find myself checking to make sure that my portfolio is prepped for potential disaster. You never want to find yourself unprepared for the next correction … and we’ve got a few bumps in the road that we can watch for.

Beware the Fed

The Federal Reserve will meet three more times before the end of 2017, and Fed Chair Janet Yellen has already exhibited a preference for lifting interest rates at the December meeting — see December 2015 and 2016.

You never want to find yourself unprepared for the next correction … and we’ve got a few bumps in the road that we can watch for.

While Yellen & Co. are making the appropriate warning noises about weak inflation so that they have an out if they want to keep rates unchanged at the end of 2017, traders are currently pricing in a 42% chance that interest rates are climbing another 25 basis points in December based on strong economic data. But there’s still plenty of time for the odds to turn in favor of a hike if the economy remains strong.

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Banyan Hill

Ted joined The Sovereign Society in 2013. As an expat who lived in South Africa for 25 years, Ted specializes in asset protection and international migration. He is the editor of The Bauman Letter and Plan B Club.