Wild Ride | Stewardship Concepts Financial Advisors

This week has been a crazy ride for stocks. We are happy and confident with our models and continue to stay invested for the long term. Thank you for joining me today for two minutes on the economy, an interesting story, and a financial planning secret.

Economy - Japan

Japan's stock market dived this past week (12% in one day). This pullback was magnified because of a "carry trade" strategy that involved borrowing low-cost Japanese money and investing in places where they could get higher-return assets, such as U.S. stocks. This strategy also affected the U.S. stock market this past week. Japan's stocks have already started to rebound.

We had a pullback this week due to Japan and the ISM Manufacturing numbers. We continue to indicate that the Federal Reserve's 2022-23 tightening is beginning to take effect with inflation and growth. Keep in mind that we had better-than-expected GDP numbers last quarter. While the money supply shows a slight rebound, its weakness suggests that the Fed may need to shift focus from just cutting short-term rates to managing the money supply to avoid risks like stagflation. As a firm, we continue to disagree with our government's decision post-2008 shift to an "abundant" reserve model because it distorts the free market and risks U.S. dollar stability.

Interesting Story - Google

Google's recent loss in its antitrust case against the U.S. government marks a significant development, with the court ruling that the tech giant's exclusive distribution agreements, particularly with Apple, have maintained its monopoly through anticompetitive behavior. While Google plans to appeal, the ruling could change how search engines are offered on devices like the iPhone. However, analysts predict that most consumers will continue to choose Google, potentially leaving Apple without billions in payments from Google.

Financial Planning Secret - Debt

Have a healthy view of debt. I may get in trouble with Dave Ramsey fans for saying this, but not all debt is bad. Bad debt is unproductive, and good debt is productive. Unproductive debt will not build wealth. For example, bad debt is credit card debt, car loans, and loans on any discretionary items. If you can't pay for a couch, trip, or appliance with savings, you shouldn't buy it.

Good debt is productive and builds wealth. Business loans and home mortgages are good debt. You are building equity in appreciating assets. I don't consider a car loan as productive debt. You are paying off a car that is declining in value. Student loans can be good debt. There is a caveat with this: the degree must increase your earning potential. If it doesn't, it becomes bad debt.

Meet with one of our Spokane financial advisors.