The Prevalence of Rare
/I recently got the opportunity to sit on a panel at a meeting of younger financial advisors. The group wanted to get different perspectives on building a financial services firm, so the panelists talked about how we came to be business owners, how our businesses have evolved over the years and what advice we would give our younger selves. That last question got me thinking, and I decided a good piece of advice I would give myself back then was to be prepared to use the term “rare” more than I ever thought I would when talking about investing and the economy.
This most recent “rare” is the rolling recession we are experiencing. This time last year, everyone—including myself—was expecting the U.S. economy to move into
a run-of-the-mill recession. A recession is defined as “a significant decline in economic activity that is spread across the economy and that lasts more than a few months” by the National Bureau of Economic Research, the organization responsible for declaring recessions. In a rolling recession, pockets of the economy experience a recession, but the overall economy keeps chugging along (although it may not feel like it to everyone!). Only time will tell, but it’s looking more and more like we may avoid a full-blown recession.
Another recent “rare” is the double-digit losses that bonds experienced in 2022. Bonds are supposed to be the ballast in our investment portfolios, but their losses kept pace with those of stocks due to a series of rising interest rates in a relatively short time period. Ouch!
Looking back over the years, the 2008 housing crisis, which led to The Great Recession, the September 11, 2001 terrorist attacks and the bursting of the dot-com bubble all come to mind as other rare events that shook our investment and economic worlds.
In general, the economic cycle is known…expansion, peak, contraction, trough. The catalyst that moves us into each of these stages over the years will be different and, more often than I realized in my early years, rare.
Although rare is more normal than I first thought, experiencing these events has taught me to keep a level head and stay focused on the long term.
- Juli Erhart-Graves, CFP®, Worley Erhart-Graves Financial Advisors
