As the holiday season begins, it’s the perfect time to pause and appreciate what we have, both in our personal and financial lives. This is particularly important since investors tend to focus on what could go wrong rather than what has gone right. At the moment, with markets performing well, it’s helpful to reflect on the past year to gain perspective as new challenges and opportunities emerge.
The stock market continued its strong performance in October despite uncertainty from a government shutdown and renewed trade tensions with China early in the month. Many major indices reached new all-time highs after recovering from a brief period of volatility. Bonds also contributed positively to portfolios as interest rates declined, fueled partly by the Federal Reserve's second consecutive rate cut.
For retirees and those approaching retirement age, there is no goal more important than ensuring their savings will support a long retirement. This challenge has been compounded by inflation over the past several years, which has eroded the purchasing power of cash savings. Today, prices remain elevated for the key spending areas affecting retirees the most, including healthcare, housing, and everyday necessities.
As many asset classes have reached new peaks, gold has also climbed over 60% this year to above $4,300 per ounce. This rally has captured headlines and prompted many investors to wonder if it is different from past episodes.
The market recently experienced its largest one-day decline since April, driven by escalating tensions between the U.S. and China over rare earth metals and tariff threats. While the brief selloff rattled some investors, markets quickly improved following softer language from the White House around trade. For long-term investors, these swings may feel like déjà vu after a period of relative market calm.
The market recently experienced its largest one-day decline since April, driven by escalating tensions between the U.S. and China over rare earth metals and tariff threats. While the brief selloff rattled some investors, markets quickly improved following softer language from the White House around trade. For long-term investors, these swings may feel like déjà vu after a period of relative market calm.
For long-term investors, a growing challenge today is how to manage cash as short-term interest rates fall. What appears safe actually comes with real costs beneath the surface, since holding too much cash can quietly undermine long-term financial goals. This comes at an important time, when some investors find themselves with “cash on the sidelines,” including a record $7.3 trillion held in money market funds.
Investors experience market swings as a normal part of investing, and this year has been no exception. While market declines - such as the tariff-driven sell-off - can be uncomfortable, they also create opportunities to invest at more attractive valuations. On the other hand, when markets recover and climb to record levels, some investors may feel uneasy even if the underlying fundamentals are still strong. In both scenarios, holding portfolios that can weather all phases of the market cycle, with an eye toward long-term financial goals, becomes even more important.
As markets reach new highs and artificial intelligence stocks continue to rally, some investors are asking "are we in a bubble?" This is as much about investor psychology as it is about market conditions. While it’s normal to worry about bubbles, focusing too much on them can lead to counterproductive portfolio decisions that prioritize timing and short-term trading rather than long-term financial goals.
Rainer Wealth Management
390 Diablo Road, Suite 202 | Danville, Ca 94526 | (925) 217-4280
