How to Prepare for a Tumultuous 2023

Today we’re talking about how to prepare for a tumultuous 2023. I recently went to a conference with other financial advisors, where I was disappointed to discover that all the signs point to a difficult year economically. Fortunately, it also presents an opportunity for many of you if you are prepared, and our advisors at Lord and Richards are excited to help. Let’s break down some of the primary concerns people have been sharing with us.

?

The first pressing question people have right now is, will there be a recession? Absolutely, we’re already in one. While I’m not necessarily a dictionary guy, a recession is formally defined as having two successive quarters of growth slower than the previous quarter, which we’ve already had. The confusing part is that we had a minor growth spurt last year between two recessive quarters, so they weren’t consecutive. However, there has still been a distinct downward trend. The real question isn’t whether we’ll have a recession in 2023, but how bad it will be. The years 2021 and 2022 brought the mayhem of runaway spending and hiring, expanding businesses, and making commitments that has set us up for an unpleasant surprise. When businesses get the rugs pulled out from under them, they have no choice but to fire people to pay off debts or manage payments.

?

Inflation only introduced additional problems that we faced in 2022 and will continue to face this year. As a result of COVID, money got crammed into the pockets of businesses and Americans. Due to reduced demand, opportunities, and willingness to spend in 2021, people focused on shoring up their balance sheets and putting cash away. As the sky began to clear, businesses saw opportunities, and consumers were convinced they no longer needed to worry and save. The Hoover Dam of cash flow burst into the economy, and everyone knew it. The Federal Reserve avoided acting for fear of throwing us into a recession, negatively impacting the markets, and how it would affect political optics. Consequently, we’re experiencing inflation we haven't seen in a generation. We can only hope that The Fed’s efforts will be successful at reigning it in.

?

In reality, prices are running away from people and incomes are not rising as fast as inflation. If everyone’s boats were rising together, there wouldn’t be as much concern. However, the expense boat is rising more rapidly than the income boat, which will be, and already has been, painful for the average American household or business. The effects were muted temporarily by the immense treasure trove Americans and businesses had accumulated, but the current savings rate has plummeted to a level not seen in years.

?

This brings us to our third problem: interest rates. The Fed’s answer to everything is to manipulate interest rates. Their goal is to control the velocity of money entering the economy by manipulating the rate you pay on debt. The idea is to encourage or discourage you from borrowing money to expand your business or lifestyle. Increasing interest rates turn the spigot down, but results have been mediocre, and inflation has not fallen as the Fed hoped it would. We may be in for a hard landing, but we still have opportunities available in interest rates and the market.

?

We’re experiencing one of the longest bear markets in history, having lasted through all of 2022, well past the average length. While this presents some challenges, the low market and high-interest rates are a boon for savers. I’ve spoken about this topic in a previous segment on YouTube called, “Savers are Finally Being Rewarded.” There are tools and strategies available right now that allow you to benefit from the low price of the markets; they’re “on sale.” You don’t have to worry about knowing when to strike because it isn’t about market timing, it’s about acknowledging there are deals to be had. At Lord and Richards, we have what we call the “goose and egg strategy.” This strategy does not encourage you to empty your savings to buy more stock but allows you to position yourself to reap a bountiful harvest in the next year or two.

?

Don't think of 2023 as only being tumultuous. Yes, there will be challenges, but there are opportunities too, and these are the times when you need to be a contrarian. Now isn’t the time to buy more stock; we have a better plan for you.

?

People come to us concerned about recession, inflation, the market, and interest rates. Our specialty is helping you build a plan and be prepared for and resilient through these exact circumstances so that you can retire financially independent. We value a biblical point of view that allows you to live an exciting retirement and do amazing things with your God-given resources. If you would like to learn more about how to take advantage of the current high-interest rates and low markets, we would love to chat with you.