Investment Market Turmoil 2022 – Is There Anywhere to Hide?

In this episode of Cut Through The Noise, Anthony Saffer, CFP®,CKA® and Alex Okugawa, CFP®, CEPA®, CKA® tackle the hottest topics in financial markets, financial planning, and life, including:

► Is there anywhere to hide in these investment markets?

► European Energy Crisis

► Will student loan forgiveness increase tuition costs?

► Credit card balances on the rise

Market Turmoil 2022

Resources Mentioned:

Full transcript:


Alex Okugawa & Anthony Saffer

Alex Okugawa 0:00
Hi there, and welcome to our segment Cut Through the Noise, where today we answer your questions that we’ve been hearing throughout the month. Today we’re talking about is there anywhere to hide in these investment markets, the looming energy crisis in Europe, and more. Stay tuned…

Hey there, it’s Alex and Anthony from One Degree Advisors. If you’re new here, we are Certified Financial Planners that help folks with all things tax, retirement, and investment related. Anthony, let’s get into it. I think it’s no secret. The stock market has been pretty bad so far this year. And I think the question on a lot of people’s minds is, Is there anywhere to hide? Is there anywhere I can go to get some relief in these markets?

Anthony Saffer 0:41
Yeah, stocks and bonds certainly haven’t cooperated. Often they zig and zag and provide great diversification with each other. And that’s just not been the case. Is it totally abnormal? No, but it is happening this year, we’ve talked about how commodities have been a safe haven, low and behold, since the middle of June, commodities have been coming down as well.

Alex Okugawa 1:00
And that’s where I think, not trying to time these things is important, right? We talked about that not going all in or all out in commodities before. And you know, if you’re going to invest in commodities, it may not be a bad idea to like overlay, like a tactical or a trend following strategy on top of that.

Anthony Saffer 1:20
Now, if we’re looking for slivers of good news, one is that, as we talked about is that markets often come back in the midst of good news, even things like Treasury notes that you know, a year two years, three years paying upwards of 3% Not too bad. Yeah. All right. So next question for you, Alex. The European energy crisis, How bad will it get?

Alex Okugawa 1:39
Well, Russia is curtailing gas deliveries, which provide a large amount of energy to Europe. I mean, how bad is this gonna get? I mean, listen, I’m no policy expert. I’m not a geopolitical expert. The thing that I’ve been hearing that we’ve been paying attention to is, if Europe has a really cold winter, this could get really bad for them. If they have a warmer winter, it may not be as bad, but they’re going to still have some serious consequences and potentially long-term adverse effects from this. I mean, here’s the thing. My whole problem with this is, that you have politicians who go up there, and they want to peddle specific information, and they talk about how well we need to be making sacrifices. And we need to do this for the greater good. It’s like, well, your people are, you’re not, you’re not being directly impacted by these policies, you’re still flying on your private jet, your house is going to be warm, you make enough money, where inflation you’re going to feel a little bit but it’s not too bad. So it kind of ticks me off when I see this stuff. Because really, the people are going to suffer through this. You see a lot of stuff and like small businesses can barely afford to pay their electric bills to stay open because energy costs are just through the roof.

Anthony Saffer 2:51
Yeah, I think it was going around like a bakery received a $10,000 energy bill, and they’re just surprised by that. It’s gonna be hard to stand.

Alex Okugawa 2:59
It was like 10,000 euros and I remember the conversion, but it is reaching parity, right? All right. The third thing here is will student loan forgiveness, increase tuition costs. We’ve seen a lot about this stuff ever since Biden announced they’ll be relieving debt.

Anthony Saffer 3:12
Yeah and we posted a video on specifically student loan forgiveness, will it increase tuition costs? Well, it’s certainly hard to see how it would help. Brian Westbury, who’s the chief economist at the first trust, had a good commentary on that. And he talked about, it’s not really just like, where it stops at $10,000 loan forgiveness. There’s also a 5% cap on student loan payments compared to income. And after 20 years, of student loans, then they become totally forgiven. So does this provide a moral hazard where somebody goes, Okay, well, I’ll just make the minimum payment, because that’s all I have to and then the rest of the debt is eliminated? So I’m just going to take as much debt as I can, schools are going to charge as much as they can.

Alex Okugawa 3:55
Yeah, I think a lot of people can look at this and say, This doesn’t solve the root cause and the root problem, right? This does not incentivize universities to have more reasonable costs. This doesn’t incentivize banking institutions or lenders from saying, you know, hey, 18 year old, yeah, sure, you can take out, you know, 1020 3040 $50,000 of debt per year to attend this university in a degree that may not generate enough income to pay off that debt. So yeah, it can become it could become a real problem here.

Anthony Saffer 4:29
We certainly need a broader solution for education. All right, the last one for you, Alex. credit card balances are on the rise. Do we have a problem and households here?

Alex Okugawa 4:37
Yeah, so I think in this report, they noted that credit card balances Rose 13% in the second quarter of 2022. I think a lot of this has to do with inflation, right? So people may be receiving some wage bumps at their jobs. Is it enough to keep pace with inflation? Well, according to this apparently Don’t think too about America. I mean, Americans love to spend, they love to spend money. We’ve always had a problem with debt in this country, not only at the consumer level but at the federal and government level. But I think it is a little bit concerning when you see credit card balances continuing to rise, because it’s just deteriorating people’s personal finances. And then when you have anything negative happen, or if you have something bad happened in your life, and you don’t have that safety net there. Now you’re in some real trouble.

Anthony Saffer 5:27
Yeah, for some context, credit card balances did come down during the pandemic, because people were spending less. I mean, we would talk with clients and we’re just like, I’m not spending any money. But now with inflation creeping in and you’re paying more for gas for everything else, credit card balances are going up.

Alex Okugawa 5:41
Yeah, so definitely keep those credit card balances under control. Staying within your means is really important right now. And now let us know what you think there’s a lot going on in the world right now. So are you staying the course with your investment plan? Or are you making some big changes? Let us know your thoughts in the comments down below. And if you enjoy today’s video, please like and subscribe for more. Thanks for watching.

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