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Strategic Wealth Blog

Be a Mercenary: 3 Ways to Improve Your Investment Process

Photo of a soldier in camouflage and tactical gloves putting money in pocket.

When investing, listening to common wisdom can be very productive. But not all “wisdom” is worth listening to.

Here are three philosophies that can help you improve your investment results.

1. You Don’t Have to Own Stocks Forever

There is a lot of potential risk in markets right now.

But guess what? There always is.

We’ve been trained to think that if you buy stocks, you must own them forever or else you’re doing it wrong.

Don’t buy into that kind of thinking.

It’s okay to get out. It’s okay to have stop losses. It’s okay to allocate capital to stocks right now, as long as you have the proper risk management strategies in place. In our opinion, that means having rules to move out of stocks and back into cash.

In fact, we think that you should intentionally be thinking shorter-term when it comes to stocks right now. There are signs that the stove could get hot. But avoiding it means you may be passing up on solid investment returns in the meantime.

2. Separate your Emotions from your Actions

We believe in having rules. This allows you to not have a vested emotional interest in the outcome of the stock market.

When humans predict something will happen, they create both a confirmation bias to that prediction as well as an anchoring bias to the predicted outcome.

A confirmation bias is when we look for things that support our way of thinking. Politics and social media are the ultimate examples of confirmation bias today. People like to watch and read things that support their view.

Anchoring bias refers to how we view an array of information based on an initial assumption or data point. If we view the market as one that should be rising, we tend to subconsciously view that as the primary outcome we should expect. And we don’t only actively seek out confirmation of our theory, we interpret data points and events to be supportive of that belief, whether that is the accurate way to interpret it or not.

Both of these biases result in viewing markets without the objectivity and discipline needed to be successful investors.

3. Be a Mercenary

This means you want to fight for the side that both pays you the most money and avoids the most harm.

Tech is doing well? Great. Invest there.

Inflation is coming? Great. Invest in areas that are showing benefits to that inflation.

Markets are crashing? Great. Have more cash.

Bottom line: Don’t be dogmatic. Don’t be a permabull or permabear. Try to fight for the winning side. You won’t always be right, but you’ll be on the right side of the big trends when they happen.

Having a process will help tremendously when markets get confusing. Remembering these three

Retirement Plan Choices for Small Businesses

Inspired mature grey-haired woman fashion designer thinking on new creative ideas at workplace. Smiling beautiful elegant classy middle aged older lady small business owner dreaming in atelier studio.

As a small-business owner, figuring out retirement choices can be a little intimidating. How do you pick the most appropriate retirement plan for your business as well as your employees?

There are a number of choices when creating retirement plan strategies for you and your employees.

Here, we will review three of the most popular for small businesses: SIMPLE-IRAs, SEP-IRAs, and 401(k)s.

This article is for informational purposes only and is not a replacement for real-life advice, so make sure to consult your tax, legal, and accounting professionals before implementing or modifying a retirement plan.

SIMPLE-IRAs

SIMPLE stands for Savings Incentive Match Plan for Employees. This is a traditional IRA that is set up for employees and allows both employees and employers to contribute.

If you’re an employer of a small business who needs to get started with a retirement plan, a SIMPLE-IRA may be for you. SIMPLE-IRA’s provide some degree of flexibility in that employers can choose to either offer a matching contribution to their employee’s retirement account or make nonelective contributions.

In addition, employees can choose to make salary reduction contributions to their own retirement account. Some small business owners opt for a SIMPLE-IRA because they find the maintenance costs are lower compared with other plans.1,2

Distributions from SIMPLE-IRAs are taxed as ordinary income, and if taken before age 59½, may be subject to a 10% federal income tax penalty. Generally, once you reach age 72, you must begin taking required minimum distributions.

For a business to use a SIMPLE-IRA, it typically must have fewer than 100 employees and cannot have any other retirement plans in place.1

SEP-IRAs

SEP plans (also known as SEP-IRAs) are Simplified Employee Pension plans. Any business of any size can set up one of these types of retirement plans, including a self-employed business owner.

Like the SIMPLE-IRA, this type of retirement plan may be an attractive choice for a business owner because a SEP-IRA does not have the start-up and operating costs of a conventional retirement plan.

This is a type of retirement plan that is solely sponsored by the employer, and you must contribute the same percentage to each eligible employee. Employees are not able to add their own contributions.

Unlike other types of retirement plans, contributions from the employer can be flexible from year to year, which can help businesses that have fluctuations in their cash flow.3

Much like SIMPLE-IRAs, SEP-IRAs are taxed as ordinary income, and if taken before age 59½, may be subject to a 10% federal income tax penalty. Generally, once you reach age 72, you must begin taking required minimum distributions.

401(k)s

401(k) plans are funded by employee contributions, and in some cases, with employer contributions as well. In most circumstances, you must begin taking required minimum distributions from your 401(k) or other defined contribution plan in the year you turn 72. Withdrawals are taxed as ordinary income, and if taken before age 59½, may be subject to a 10% federal income tax penalty.1

1. IRS.gov, March 4, 2021
2. Investopedia.com, April 25, 2021
3. Investopedia.com, February 23, 2021

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2021 FMG Suite.

How to Treat Your Career Like a Sport

When thinking about your business or career, it might seem odd to make comparisons to a sport. But when you zoom out and look at the similarities, they’re more closely related than you may think.

For example, a common problem many people face as they end their careers and enter retirement is a loss of purpose and a feeling of emptiness. The thing that consumed eight hours a day for the past 40 years is now gone.

Athletes face these same struggles. But they tend to face it much sooner in life. However, some athletes find themselves thriving in life after sports. Those that succeed learned many valuable lessons and picked up traits from their sport that can translate into other areas of life.

Derek Jeter, former Yankees shortstop and first-ballot Hall of Famer, is now CEO and part-owner of the Miami Marlins and co-founded the media company, The Players’ Tribune. Hall of Fame defensive end Michael Strahan took his talents and football knowledge to live TV and has co-hosted Fox NFL Sunday, $100,000 Pyramid, and even Good Morning America.

While your career may not lead to headlines and TV gigs, there are a few ways that you can treat your career like a sport to set yourself up for long-term success.

The 10,000 Hour Rule

In his book, The Outliers, Malcolm Gladwell claims that it takes roughly 10,000 hours of work to master a skill. While the specific number of hours has been challenged by many, the principle will always make sense: to be great at something, you must put in the work.

Athletes dedicate years, sometimes decades, to their craft to be the best that they can be. We shouldn’t treat our own careers much differently.

Over the course of your working career, you’re most likely going to put 10,000 hours of work in by just showing up. However, if you’re intentional about the work that’s being put in, you can begin to propel your business to heights you never imagined possible.

For example, you may want to pursue a graduate degree or additional certifications that allows you to move up in the ranks of your profession more quickly.

Possibly more importantly, putting in the work of connecting with like-minded people on the same path as you might pay major dividends. Growing an alternative skillset could lead to a career change that provides higher potential income and happiness.

When you put in the work, it’s hard not to make progress.

Be Prepared for Uncertainty

Just like athletes devote time to be mentally and physically prepared for competition, an effective way to level up in your career is by being prepared. Whether you’re interviewing for a new job or giving a presentation to your team, preparation is critical and impacts how you perform the given task.

When you’re prepared, you’re more confident. The stress that comes with uncertainty disappears when you’ve prepared appropriately, and with that, the likelihood of achieving the desired result is increased.

Be Accountable in Your Work

Being accountable is a trait that impacts many areas of life, even outside of your career. When things don’t go right, it’s easy to blame other people or external factors.

However, by taking ownership of your work, you’ll stand out from other workers, and you begin to build trust with the people around you.

While being accountable to others is excellent, it doesn’t stop there. It’s also important to be responsible for yourself and your goals.

For example, if you want to get promoted over the next year and you’ve laid out the steps needed to make it happen, stick to them. Too often, we set goals for ourselves, like New Year’s Resolutions, and end up leaving them behind when life gets in the way.

Embrace Your Team

In both the workplace and sports, being successful almost always requires good teamwork.

The backbone of a championship team usually consists of two essential factors: cohesion and communication.

But one doesn’t come without the other.

Cohesion is formed through effective and consistent communication. These two traits then begin to form a solid foundation of trust, leading to better, more efficient work.

Having a good relationship with a team or coworkers can create healthy competition, and a great example of this is the sales profession.

Imagine being a salesperson who works alone, didn’t have a team to fall back on, and didn’t know how the rest of the team was performing. They might get discouraged or lose sight of the end goal. So, there’s a reason that most sales teams operate together – it can create a healthy competitive atmosphere, increases engagement, and keeps everybody’s motives and goals aligned.

Aside from the performance aspect, embracing your team and having an enjoyable workplace makes work that much easier, and the foundation is built through being reliable, offering help to others, and being a good teammate.

The Takeaway

In our careers, it’s easy to lose sight of an end goal and feel like we’re not making progress.

But when you treat your career like a sport and strive to get better, it starts to feel like a natural part of your life, not just another task to check off the list each weekday.

The information contained herein is intended to be used for educational purposes only and is not exhaustive.  Diversification and/or any strategy that may be discussed does not guarantee against investment losses but are intended to help manage risk and return.  If applicable, historical discussions and/or opinions are not predictive of future events.  The content is presented in good faith and has been drawn from sources believed to be reliable.  The content is not intended to be legal, tax or financial advice.  Please consult a legal, tax or financial professional for information specific to your individual situation.

Building Your Life Team

Assistance, teamwork and achievement concept. silhouette of man helping friend climbing rock to top and success together

A time-tested piece of career advice is to find a mentor.

But as the world gets more complex, simply having a good career mentor isn’t enough.

You need a team. In today’s reality of multiple jobs, the ability and ease of changing your career path and the sheer number of choices we face every day, one mentor isn’t really going to cut it. The new approach is to build a team that can help you create an intentional life.

Your relationships, your community, your work…all your choices should help you build towards the life you want – while ensuring you can stay true to yourself along the way.

There’s no blueprint or roadmap to help us know if we’re making the right decisions or not.

But there is one thing you can do to help make it easier: build a ‘life team’.

What Is a Life Team and Why Would You Need One?

A life team is a hand-selected group of people that you believe can bring value to your life. This is not like on the playground at recess where you pick the most athletic team member.

Your life team is made up of people with a myriad of skills, experiences and strengths that can provide valuable, timely advice and help you navigate through the challenges and complexities of life.

It’s easy to think that as we go through life we must fend for ourselves; however this is far from the truth. Being able to learn from others and bounce ideas off each other can be beneficial to both parties. And having trusted professional relationships can help in many aspects of life.

They can act as a sounding board for tough decisions. Be there to help with decision-making when at a crossroads. And provide emotional support when the going gets tough.

We’ve broken down the big areas where you may want to find counsel and support in different disciplines – but of course, all of these can work in multiple situations.

Building Your Financial Foundation

One aspect of your life team that may already be established is your financial team. This consists of professionals that can help navigate the financial side of life and typically includes roles such as a wealth advisor, a CPA, and an attorney.

Since everyone has to file taxes, a CPA is usually one of the first relationships that gets established. However, CPAs and accountants usually do more than just taxes and can play a critical role when it comes to helping to build your wealth.

And just like an accountant does more than just taxes, wealth advisors typically do more than just investments. Having a trusted wealth advisor in your corner may turn out to be one of the best investments you make. Primarily because they help steer the ship in your financial life. From helping manage financial risk to growing your net worth to helping uncover and clarify your goals, a financial advisor is there with you through it all.

And when it comes to the legal aspect of finances, a trusted attorney is another professional relationship that can bring value. One of the biggest aspects of your financial life that an attorney can help with is estate planning. You’ll want to get this started early, and keep them updated about your situation over time, so they can provide better solutions as things change.

Ideally, these three professionals will work in tandem to provide you with confidence and clarity in both your professional and your financial life.

Finding Your Guides Through Life

Most of us spend most of our time on a few things – our family, our hobbies and passions, and our career. When it comes to our careers, it’s easy to begin feeling stuck or complacent. That’s where career and life mentors can play a vital role.

The typical role that a life coach plays is helping individuals feel more fulfilled by clarifying their goals, identifying what’s holding them back, and then coming up with strategies to help them move forward. If you’ve felt stuck in life or in your career, a life coach may be the unlock to success and happiness.

Mentors are still valuable – you just may need more than one. With a career mentor, it’s wise to seek out someone who’s a few years ahead of you as well as someone who’s a couple decades ahead of you. The reason is because these relationships can help build perspectives that you wouldn’t have. And through these conversations, you can create a history that speeds up your own learning curve so you can effectively advance and progress through your career.

A good mentoring relationship is just that – a relationship. It should be valuable to both people.

Staying Centered Through It All

As we all know, life comes at us fast. We’re always solving the next problem while trying to keep up with our current way of life and finding time to work on careers while spending time with family, while following your own passions and interests. It’s tough to find that fleeting equilibrium that we call work-life balance.

A common route that people take when trying to find balance in their life is picking up new or forgotten hobbies. This may be something you enjoyed as a kid that got pushed to the side as life picked up speed, or a passion that you’ve never had the time to explore. Having a hobby or activity that can help take your mind off the day to day stresses of life is an effective way to not only stay centered, but to also live a more fulfilled life.

The rise of our digital lives, and in particular social media, is often cited as one of the negatives of modern society – but there is a big benefit, if you avail yourself of it. The proliferation of apps, blogs, and influencers who focus on wellness makes it incredibly easy to incorporate these elements into your life. The level of comfort we all have now with videoconferencing has added yet another element.

Creating a meditation practice, developing a yoga or other spiritual-based exercise routine you can incorporate into your mornings, even joining a like-minded community that works towards change – these can all add a necessary element of discipline, health and clear-mindedness that can be hard to access as we go through our daily lives. 

The Takeaway

Through intentional relationship building, you can begin to form a team of people around you that can provide valuable advice and necessary feedback.

When seeking out a life team, it’s important that you first understand your own weaknesses so you can determine the most impactful relationships to build.

To get the most out of your life team, make sure you stay in regular contact and share updates, accomplishments, and challenges because this will make them feel like they’re a part of your story and your mission which will only increase the value of the relationship for everyone.

The information contained herein is intended to be used for educational purposes only and is not exhaustive.  Diversification and/or any strategy that may be discussed does not guarantee against investment losses but are intended to help manage risk and return.  If applicable, historical discussions and/or opinions are not predictive of future events.  The content is presented in good faith and has been drawn from sources believed to be reliable.  The content is not intended to be legal, tax or financial advice.  Please consult a legal, tax or financial professional for information specific to your individual situation.

Are the Dog Days of Summer Over?

A calm summer for the markets was interrupted today with a large selloff. Is this just a blip, or is it the start of a bigger decline?

What happened:

  • Dow Jones Industrial Index closed down 725 points, or 2.09%
  • S&P 500 was down 68 points or 1.59%
  • The media blamed COVID fears, but it looks more technical in nature
  • VIX Index rose nearly 40% at one point during the day
  • Bonds had their best day of the year, with long-term US Treasury prices up over 2%

Near-Term Market Assessment:

  • Numerous warning signs have been happening over the past three months:
    • Lumber prices have fallen 68% from their highs.
    • 10-Year Treasury Yields have dropped from 1.76% in March to 1.19% today.
    • Fewer stocks have been participating in the slow drift higher since mid-February. Today, more than 50% of the stocks in the S&P 500 are below their 50-day moving average (more on this below). That number has been steadily rising since April.
  • It is too early to tell if this selloff will continue. Bull markets tend to have short, sharp declines like this.
  • The S&P 500 Index is only 3% off its all-time highs. So the fear seems somewhat unwarranted at this point.

Portfolio Implications:

  • We have been systematically raising our stop-losses over the past few months.
  • We sold two positions today, one stock ETF and a high-yield bond ETF. Both moved to cash equivalent ETFs.
  • We may get further sell signals this week. If we do raise cash this week, it may not remain in cash very long if the market decides to resume its move higher.
  • We do not know when a short-term decline will turn into a long-term decline. That’s why we have rules and don’t try to guess. This kind of environment has the potential for a “whipsaw”, where we move from invested to cash and back to being invested. This is definitely not the favorite part of our process, but it is a natural consequence of having disciplined rules and not just winging it.

Market Discussion

Markets were down over 2% today. The primary (and easy) explanation is COVID. Every state in the US is showing a rise in cases. Los Angeles reinstated mask requirements this past weekend (even for those fully vaccinated). Other parts of California and possibly New York City may follow suit with mask requirements.

Naturally, any volatility in the markets is blamed on the most recent “thing”. It’s natural to assume that the rise in cases we are seeing now would result in a market environment like we saw in early 2020. We’re human and that’s what we do…extrapolate past events and assume they will happen again.

But the reality is that there were plenty of factors to explain the move lower today.

And they are mainly technical in nature.

First, market breadth has been very narrow the past few months.

This simply means that fewer and fewer stocks have been in uptrends, despite markets drifting higher. In fact, many stocks have been in downtrends since April.

The chart below shows the percentage of the S&P 500 Index that has been above its 50-day moving average (50dMA).

S&P 500 Index components above 50 day moving average following the market decline of July 19, 2020.

The 50dMA is simply the average price of a stock over the last 50 trading days. A stock above that level is generally considering to be in a rising trend (or a bull market). A stock that falls below that level is considered to be in a declining market.

What the chart above shows us is that while the market has been drifting higher, over 50% of the stocks in the index were in bear markets in June. This is referred to as “breadth”.

This indicator is similar to a game of jenga. When there are many blocks supporting the tower at the start of the game, the tower is strong and sturdy.

But as the game goes on, there are fewer blocks supporting the ever increasing height of the jenga tower.

This is happening in the stock market. When there are a lot of stocks supporting the index, it is more sturdy. In April, over 90% of the stocks in the S&P 500 Index were above their respective 50dMA. But as more and more stocks begin to reverse trend and fall, the index get wobbly.

This is very similar to mid-2018. We wrote about breadth in our “Soldiers are AWOL” report. After a weakening breadth environment in mid-2018, the market corrected by 20% in Q4 of that year.

The big tech stocks have been doing the heavy lifting in the past three months. The same exact thing happened in 2018.

The next reason is simply that the market is overdue for a correction.

So while COVID is to blame, the fact remains that we are due for a pause following the massive rally from the COVID lows last year. The market has had very little pauses, and is well overdue for a correction.

We shared the next chart in our last email newsletter, but it’s worth sharing again.

This shows the market rallies from previous major bear market bottoms. Three environments are shown here (1982, 2009 and 2021).

This chart suggests we are due for a natural pause given the strength of the move from March 2020’s lows.

So while the news is blaming COVID, the reason for today’s selloff seems to be much more technical in nature than simply worry about the delta strand.

The next few days will provide tremendous insight into what may happen over the coming weeks and months.

We had two sell signals today, selling one stock ETF and a high-yield bond ETF.

There is a chance we get many more sell signals this week.

However, no one knows if this is just a blip or if it is the start of something bigger.

Given the positive trends in the economy, continued massive support from the Fed, and the very technical nature of the market selloff today, we should assume that the bull market is still in tact, but due for a pause.

Risk management is a priority for us and our clients. Therefore, we will not wait to see what happens. We will act on our signals, and adjust course as necessary.

That could mean increased cash, but it could also mean that cash on the sidelines today gets put back to work very shortly.

Either way, the dogs days of summer could indeed be over for the stock market, even if it simply means a temporary pause in the bull market.

Please do not hesitate to reach out with any questions or concerns you have.

Invest wisely!

Managing an Inheritance

Last Will And Testament With Money And Planning Of Inheritance

Inheriting wealth can be a burden and a blessing. Even if you have an inclination that a family member may remember you in their last will and testament, there are many facets to the process of inheritance that you may not have considered. Here are some things you may want to keep in mind if it comes to pass.

Keep in mind this article is for informational purposes only and is not a replacement for real-life advice, so consider speaking with a legal or tax professional before making any decisions with an inheritance.

Take your time. If someone cared about you enough to leave you an inheritance, then you may need time to grieve and cope with their loss. This is important, and many of the more major decisions about your inheritance can likely wait. You may be able to make more informed decisions once some time has passed.

Don’t go it alone. There are so many laws, choices, and potential pitfalls – the knowledge an experienced professional can provide on this subject may prove critical.

Think of your own family. When an inheritance is received, it may alter the course of your own financial strategy. Be sure to take that into consideration.

The taxman may visit. If you’ve inherited an IRA, it is important to consider the tax implications. Under the SECURE Act, distributions to non-spouse beneficiaries are generally required to be distributed by the end of the 10th calendar year following the year of the account owner’s death.

It’s also important to highlight that the new rule does not require the non-spouse beneficiary to take withdrawals during the 10-year period. But all the money must be withdrawn by the end of the 10th calendar year following the inheritance. A surviving spouse of the IRA owner, disabled or chronically ill individuals, individuals who are not more than 10 years younger than the IRA owner, and children of the IRA owner who have not reached the age of majority may have other minimum distribution requirements.

Stay informed. The estate laws have seen many changes over the years, so what you thought you knew about them may no longer be correct.

Remember to do what’s appropriate for your situation. While it’s natural for emotion to play a part and you may wish to leave your inheritance as it is out of respect for your relative, what happens if the inheritance isn’t appropriate for your financial situation? A financial professional can help determine if the inheritance fits with your overall goals, time horizon, and risk tolerance.

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2021 FMG Suite.

The Cryptocurrency Conundrum

Bitcoin, ethereum and Dogecoin have fallen dramatically in recent weeks.

Recently, you may have seen a number of major cryptocurrencies fall thanks to a continuing sell-off that began in the past few weeks. In fact, over $250 billion was lost in the crypto market alone.1

It may be tempting to view this as another volatile moment in the crypto markets, but there’s more at work here than a temporary trend towards selling.

Prior to this moment, over 50% of the world’s cryptocurrency was mined in China using custom-built computers with a high hashrate. Hashrate, or the rate at which calculations can be performed, is a crucial factor for those who “mine” cryptocurrency. The higher the hashrate, the more calculations that can be completed per second, and the more cryptocurrency that can be mined.2

However, these super-powered machines also require a phenomenal amount of power—enough to overload local infrastructure in some cases.3

This has led to China directing its electric companies to cut power to major crypto-mining operations across the country. The question is, why now? There may be multiple reasons, but the Chinese government has claimed that it’s acting now because of concerns around crypto’s volatile price, concerns over electricity use, and cryptocurrency’s potential use for money laundering and illegal dealings.4

With all of this in mind, it’s more important than ever to be aware of your risk tolerance if you’re thinking about exploring cryptocurrency. Cryptocurrency is not a currency at all. It’s a speculative asset class that is not appropriate for everyone. Only people with a high-risk tolerance should consider cryptocurrency assets.

Like other alternative assets, cryptocurrency can be illiquid at times, and its current values may fluctuate from the purchase price. Cryptocurrency assets can be significantly affected by a variety of forces, including government decisions, economic conditions, and simple supply and demand.

Give us a call today if you have any questions about the above, or just want to chat. We’re always here to help!

1. CNBC.com, May 19, 2021
2. Theverge.com, June 23, 2021
3. Visualcapitalist.com, 2021
4. Reuters.com, May 21, 2021

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite, LLC, is not affiliated with the named representative, broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security.

The First Wave of Inflation is Receding

Waves recede in the sunset, similar to how the first wave of inflation is receding.

Last month we wrote in our Insights report “The Coming Inflation Waves” that we should not expect inflation to come at us all at once. Instead, we should expect it to come in waves.

Well, it looks like the first wave is starting to subside.

Lumber prices were one of the most common data points when the topic of inflation was discussed. Rightfully so…it went up nearly four-fold from 2020 into early 2021.

The chart below shows just how dramatic the price movements have been.

Lumber prices were up four times from the COVID low, and have now fallen 50% from their highs. Signs of inflation acting in waves.

This is exactly what we are talking about when we discuss the “waves” of inflation that we will likely see. Two steps forward and one step back will likely be the continuing pattern of price movements for inflationary assets like lumber over the coming years.

However, all inflationary assets will not move exactly in tandem. There will be ebbs and flows all around global markets.

But it is easy to see just how fast inflation can both make its presence known and recede and fall in price.

These types of price movements are the perfect conditions for investment mistakes. Make sure you stick to a disciplined process that adjusts to the changing landscape. Do not stubbornly buy and hold, but do not subject yourself to the emotional roller coaster of big price movements either.

This type of volatility lends itself to opportunities if handled correctly. But it also is full of risks for those not prepared.