Kelly Perkins: Sorry Folks, the Government’s Closed… and It’s a Nothing Burger
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By Kelly Perkins
Special Contributor, Novēm Wealth
So we have a government shutdown. While there is a lot of finger-pointing and angry rhetoric, it’s really not much to be worried about. The markets are not reflecting any concerns. Historically, markets don’t react to government shutdowns and, in fact, typically do quite well after they are resolved.
Our economic data is still coming in stronger than anyone expected. Remember earlier in the year, after the tariffs were announced, 85% of all the most important and influential analysts, banks, and economists predicted from sub 1% growth in GDP to a high of 1.6%, which, as of last week, came in at a robust 3.8% for only the second quarter.
Good grief; they have gotten this all so wrong repeatedly. Job losses? Nowhere in sight — layoff announcements actually fell in September, with year-to-date hiring at levels unseen in 16 years. Remember all the “crisis” talk about the Big Beautiful Bill costing $3 trillion? Well, new estimates show a $3 billion surplus. Let that sink in and pair that with the incredible innovation super cycle we are in, powered by AI and driving productivity unlike anything we have ever experienced in the history of the world. There is more liquidity in our economy as measured by M2 (cash, money markets, CDs, bank deposits, etc) than ever before.
In summary, remember to be skeptical of impending doom prognosticated from social media, legacy media, newspapers, research reports and the like. Trust the data, trust the numbers, and walk toward the opportunity while everyone else thinks it’s a bad time to invest. Especially in Texas. We’re at the epicenter of all this goodness and as political tensions mount on the coasts, people are flocking to our Lone Star State, bringing businesses, employees, and their families.
Family Banking: The Modern Solution to Rising Rates and Outdated Strategies
With markets driving investment portfolios, skip the “rate debate” and strategize how to create “family banks.” We are utilizing the assets of parents and grandparents to structure loans within the family for younger buyers while structuring smart asset transfer strategies in estate plans. If done correctly and papered, it can be helpful for multiple generations and home ownership.
Investment strategies widely used today evolved in the late 80’s and came into vogue in the 90’s. They were created in a world where the markets were run by phone or teletype and orders were entered manually. Exchanges were run on trading floors via “open outcry” like the New York Stock exchange and the Chicago Board of Trade (CBOT) or the New York Mercantile Exchange (NYMEX), which was made famous in the movie Trading Places.
I remember the first day that a billion shares traded in a day in 1997. Today, hundreds of billions of shares trade hands daily, now that we run trading on sophisticated computers with lightning-fast execution. Imagine trying to build a house without power tools.
Stop Following the Herd: Why Conventional Portfolios Keep Losing
Recently, I have been hearing lots of jargon from people about investing, words like allocation, diversification, valuation, ratio, investment mix, and rebalancing.
Here’s the thing. There isn’t a one-size-fits-all approach to managing investments. Every strategy has failed at some point in the past, whether it’s “own your age in bonds,” the “couch potato
allocation,” keeping a “balanced portfolio,” or even “indexing.”
If you followed a balanced or age-to-bond mix, you might have held a 50% bond allocation in early 2022. As the Fed began raising rates, you would have found the “safe” half of your portfolio down by more than 38% less than 18 months later, and today, you would still be down by more than 28%. Does that seem like a sound investment strategy?
Everyone knows bond prices move inversely to interest rates. The Fed was clear on what they were going to do. Today, over 90% of investment advisors follow this strategy or some variation of it.
Get good advice, know what you own, and why you own it!
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested in directly. Securities and advisory services offered through LPL Financial, a registered investment advisor, Member FINRA/SIPC.
