The Prudent Retiree - March 23, 2023

Who is the only woman elected to the Rock and Roll Hall of Fame as both part of a group and an individual performer? Stevie Nicks. That’s it. Prudent Retiree wants to recognize her outstanding achievement during International Women’s Month. Stevie has been making hits and wowing audiences for more than fifty years. Many girls born in the 1970’s were named Stevie, Rhiannon and Sara as a tribute to her.

As if there weren’t enough problems in the world, we are now dealing with a banking crisis. Will this be isolated to a limited number of banks or will there be contagion with bank failures spreading and spillover into the entire financial system? Already, several bankers have had to put their kingdoms up for sale – Silicon Valley Bank, Signature Bank, First Republic Bank and Credit Suisse. The Fed, FDIC, US Treasury and other banks made sure no depositors lost a penny. So far, crisis averted. We don’t yet know how this will play out. Many argue the government should stay out and let the chips fall where they may. Moral Hazard. We have a long history of backstopping and bailing out our financial system. No depositors have lost money since 1934. More kingdoms may be put up for sale, but it's safe to figure you won’t lose your money in the bank. No mattresses needed. 

Prudent Retiree believes the banking situation will be resolved. Moral Hazard just won’t fly politically. There will be adverse headlines and market volatility will continue. The real issue for the market continues to be the Fed and interest rates. Will the Fed need to raise rates higher to tame inflation? They need to slow demand and that could result in a recession and an uptick in unemployment. Certainly, this is a possible outcome. How much is that outcome already priced into the stock and bond markets?

Stevie Nicks sang that you need to “pick up the pieces and go home.” Our allocation remains 50% equities, 50% fixed. That is what our model and the markets are telling us. A recent report from Fidelity stated the average retiree lost 23% last year. Be glad that you’re not average. Expect continued volatility. Listening to the market will keep your portfolio intact—no pieces to pick up.

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Horseman Group – 3 CityPlace Drive - Suite 290 – St. Louis, MO 63141 – 314.692.7842 – www.horsemangroup.com

Advisory Services offered through Horseman Group. Securities offered through AW Securities, a registered Broker/Dealer, member FINRA/SIPC.