Hope Island!

(with an assist to my coach, Greg Wood of Sandler Training)

Hope just does not get us to where we want to be. Action does.

Hope is not a high growth strategy.

As applied to the world of wealth and investment management, "hoping" that everything will work out in the end, hoping that stock market prices will go up (and your investment portfolio with them) is likely to end in disappointment if you do not have an actionable strategy. You need a plan. You need a plan to set your goals and take the appropriate steps to get to your goals, with long-term thinking. 

You also need to take risk (because risk - free returns, after taxes and commissions are running below the level of the increase in your cost of living), but that risk needs to be managed and mitigated as best as is possible.

There is plenty of risk and uncertainty abundant in the world today: Trade wars are in full impact mode, as our friend and well-known economist David Rosenberg reminded us on Friday: "Anyone who simply looks at this as a trade conflict is not looking at the forest past the trees. This is an economic war on an epic scale...this is a battle for economic supremacy".

China's economic growth has slowed to the lowest level in 27 years. Germany has slipped (or is about to slip) into recession. The U.S. economy will likely show annualized economic growth for Q3 at about 1.8%:

Which will put the full year ending at Q3 at about a 2% growth rate. The trend is clear, it is down and to the right and shows only signs of gaining momentum in that direction.

And the U.S. Federal Reserve will likely drop it's Fed Funds rate by 1/4% after its interest rate decision making (FOMC) meeting which ends Wednesday. They will not be doing this because the U.S. economy is showing signs of growth. Clearly, trade wars are the main destabilizing force.

Even the CEO's are uncomfortable. CEO's are not paid to sit around and hope. They have to prepare their companies for economic slowing.

And guess what? They are not hiring: job cuts are up about 28% in 2019. The highest since 2015. This may not be good for the employment growth data that will be released on Friday of this week: expectations are for about only 85,000 new jobs and a jump in the unemployment rate to 3.6 -3.7% (both lagging economic indicators). The slowing trend continues.

Meanwhile, we are about halfway through earnings season and the blended (actual plus estimated) results for Q3 are for a decline of 3.7% annual growth rate. This would be the third consecutive quarter of negative growth.

With share prices at record highs, I would suggest that there is a great deal of hope built into share prices: "trade optimism", lower interest rates.

However, behind the scenes, the picture is probably not so hopeful. Slowing economic growth, political problems, negative earnings growth, falling business and consumer confidence.

Hope won't protect your financial plan. Mitigating risk will. At High Rock we manage risk first, for the long-term. We don't chase short-term returns, that is gambling. We are stewards of wealth, not gamblers.