The Case for Rational Optimism

Bob Reby, CFP®

Rational optimism is challenging work in today’s world, as we’re surrounded by negativity and bad news on the airwaves. Even as unemployment numbers are low and equity markets produce strong gains, the media constantly presents pessimistic views that often prevent investors from making rational decisions.

(The video below is a presentation I gave in November on this topic).

Looking at facts and verifying the sources have always been helpful for us to combat this cynicism and capitalize on opportunities.

So, let’s begin!

Following are some good viewpoints and facts to help give perspective: 

• The U.S. unemployment rate in April was 4.4%, down from 9.9 % in April of 2010.*  That’s good!
• American household debt service, as a percent of disposable income, is at only 10%; the lowest it’s been since 1980.*
• Beyond household balance sheets, corporate and bank balance sheets are the healthiest they’ve been in decades. As a side note, corporate earnings are the engine that allow equity prices and dividends to grow over time, with the goal of providing income that grows with rising prices and taxes.* 
• The consensus calendar 2017 earnings estimate for the S&P 500 is $131, and for 2018, $147. Both would be records. That’s healthy. This doesn’t count out a healthy correction on the horizon.* 

I just wanted to share this small sampling of information to help demonstrate how strong the economy is. I hope you agree.

Aligning your resources toward your families’ goals is paramount to prudent financial planning. Then, monitoring and proactively adjusting to meet your income and lifestyle needs is where real value can be added. As you make adjustments to your financial plan and your investments, rational optimism based on real evidence is critical to identifying your opportunities to enhance your financial security.

If you would like advice developing a holistic, comprehensive financial plan that capitalizes on opportunities in the stock market and beyond, please do not hesitate to call Reby Advisors: (203) 790-4949

Enjoy the summer!

*Nick Murray June 2017

The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. It is not possible to directly invest in an index. The return and principal value of the investments will fluctuate so that, when redeemed, they may be worth more or less than their original cost. Past performance is not a guarantee or a predictor of future results of either the indices or any particular investment.