The Wealth Effect Blog

For long-term investors, understanding what can and cannot be controlled is the key to financial success and peace of mind. While all investors would like to believe they can predict or even control the market's direction, experience teaches us that this is difficult. Constructing and risk managing an appropriate portfolio, while making strategic and tactical allocations based on market opportunities, ideally with the guidance of a trusted advisor, is often the best approach. However, while following markets and maintaining a perspective on the economy is essential, an even more fundamental key to success is investing early, investing often, and remaining focused on long-term financial goals. What can investors do to benefit from these principles today?

On August 1, Fitch, a credit ratings agency, downgraded the U.S. debt from AAA (the highest rating) to AA+. Fitch had warned of a possible downgrade during the debt ceiling crisis earlier this year and has sounded alarms since 2011, when a similar crisis occurred. While few investors, economists, and business leaders view the downgrade itself as meaningful, primarily because AA+ still represents an extremely low default risk, that does not mean it has not impacted financial markets. After all, investors have benefited from markets mostly moving upward this year, leaving some investors unprepared for even small stock market swings. What drove the downgrade of the U.S. debt, and how can long-term investors maintain a balanced perspective?

Market and economic expectations have shifted 180 degrees since the start of the year when many investors expected a recession and prolonged bear market. Ongoing economic growth, low unemployment, improving price pressures, and slowing Fed rate hikes have spurred a strong market rally, especially across sectors that struggled last year. While the economic situation is far from perfect, and investors should always be prepared for uncertainty, it's also essential to recognize the positive trends raising the odds of a "soft landing." What factors are driving these changes in investor expectations?

Planning for retirement for mid-career tech professionals has never been more important and yet so challenging. Given the problematic inflationary conditions of the past two years, the risk that worries most continues to be outliving their savings. This is because, when it comes to markets and the economy, we can't control the timing of events - including day-to-day market swings and whether investors begin retirement in a bull or bear market. What we can control, however, is our own behavior by staying disciplined. While there are never any guarantees, history shows that having a sound financial plan that can adjust to changing conditions, accompanied by proper financial guidance, is the best way to minimize retirement risks.

With several large bank failures in recent months, we are all reminded of the 2008 Great Financial Crisis and Recession, when millions lost their jobs, homes, and ways of life. While many factors contributed to this economic disaster, one term can cover nearly all of them: systemic risk. The financial system plays a crucial role in the global economy, facilitating the flow of funds, managing risk, and supporting economic growth. However, it is also vulnerable to systemic risk, which can have far-reaching consequences for the stability of financial markets and the broader economy. Let's look at what systemic risk is and how it can impact your behavior as an investor.

Spring is the perfect time to freshen up not just your home but also your finances. As a tech professional, you work hard to build a successful career and secure your financial future. However, just like your physical space, your wealth plan may also need some spring cleaning to ensure it is in optimal shape.

In times of market uncertainty, investors often turn to sayings such as "those who fail to learn from history are doomed to repeat it" and "history never repeats itself, but it does often rhyme." When it comes to the daily headlines, both quotes are relevant, given the long history of banking crises and market swings.

Last week, one of the largest single value destruction events occurred in market history. As a result, many investors might be asking why, or even how, did this happen?

Coinbase, the popular Bitcoin and cryptocurrency exchange, began trading shares on April 14. Forgoing the traditional IPO process, Coinbase did a direct listing on the NASDAQ. Here's why that's unusual, and what interested investors may want to know.

While Bitcoin continues to rally in popularity and price, how has COVID-19 affected it in 2020?