'The traditions the school possess brought me to A&M' our new accounting intern shared with us in a recent interview. Class of 2023, Kendall is looking forward to applying and starting the PPA program this year. After graduation, she would like to move to Dallas to work for one of the Big 4 Accounting firms. Until graduation, Kendall is just enjoying summer time and likes to visit her family in Marble Falls. She especially loves her time with her 1 year old nephew. Just for fun we asked Kendall what her ultimate vacation would be? She said Greece for the gorgeous views and she would love to dive into the culture. Learn more about Kendall and her roll at Traditions Wealth Advisors, on our 'About' 'Our Team' tab.
What Is A Recession?
With current market conditions, many media outlets are calling for a recession or stating that we are already in a recession. There are many broad ways to define a recession, many economists say that a recession is two quarters in a row with negative GDP growth. However, this is debatable as there are many different opinions on what a recession is. My personal favorite is from a committee of experts at The National Bureau of Economic Research (NBER), a private non-profit research organization that focuses on understanding the U.S. economy. They define a recession as “a significant decline in economic activity that is spread across the economy and lasts more than a few months.” The NBER takes account of a number of monthly indicators such as employment, personal income, and industrial production, as well as quarterly GDP growth. Therefore, while negative GDP growth and recessions closely track each other, the NBER’s consideration of monthly indicators, particularly employment, means that the identification of a recession with two consecutive quarters of negative GDP growth does not always hold.
Latest Macroeconomic Update
Some of the top economists in the world have posted their thoughts on the current macroeconomic environment in the U.S. and abroad over the past week. Byron Wien who is Vice Chairman of Blackstone’s Private Wealth Solutions group stated that he believes that if we do go into a recession, it will be a short and shallow one. He believes that this recession will not resemble the recession of the Dot.com crash and the Great Recession between 2007-2009. Wien said that the difference between the current markets and these two particular recessions is that consumers and companies are in much better shape compared to the two previous recessions. Consumer savings have been built up over a sustained period of time and companies currently have strong balance sheets. Wien also stated that the two previous recessions were marked by extremes. There were extreme valuations of companies with no earnings in 2001 and excessive speculation in the housing market in 2008, with unemployment ticking up and inflationary pressure starting to ease, Wien doesn’t believe that this recession will be caused by an extreme.
Another economist that gave his recent macroeconomic outlook is Dr. David Kelly, Chief Global Strategist and Head of the Global Markets Insights Strategy Team for J.P. Morgan Asset Management. Dr. Kelly also believes there will be a shallow and lighter recession in the future, he also stated that this recession would be nowhere near the magnitude of the 2001 Dot.com recession and the Great Recession of 2007-2009. Dr. Kelly also believes that the markets have not bottomed out yet, as consumer sentiment is still very low, and inflation is still high but starting to decline.
The Fed also released its June Meeting Minutes, they reaffirmed their commitment to bringing down inflation with more rate hikes between 0.5%-0.75% in the upcoming meetings. They acknowledged that the policy tightening would likely come with a price, “participants recognized that policy firming could slow the pace of economic growth for a time, but they saw the return of inflation to 2% as critical to achieving maximum employment on a sustained basis.” The approach comes with the U.S. economy already on shaky ground. Gross Domestic Product (GDP) in the first quarter fell 1.6% and is on pace to decline 2.1% in the second quarter, according to an Atlanta Fed data tracker. Some people would view this as an official recession; however, it would be a historically shallow recession. The Fed officials also noted some reports of consumer sales slowing and businesses holding back on investments due to rising costs. The war in Ukraine, as well as supply chain bottlenecks and Covid lockdowns in China, were also a concern. Officials also penciled in a much bigger inflation surge than before, now anticipating headline personal consumption expenditures prices to jump 5.2% this year, compared to the 4.3% previous estimate. The meeting minutes also noted that after a series of rate hikes, the Fed would be well-positioned to evaluate the success of the moves before deciding whether to keep going. They said “more restrictive policy” could be implemented if inflation fails to come down.
Is A Recession Already Priced Into The Markets?
Equities have fallen so quickly, well ahead of profits, that equities have already factored in a recession. A broad range of data suggests recession risks in the U.S. are mounting. Economist Albert Edwards stated “The leading indicators look grim as well. For example, the Conference Board’s leading indicator fell for the third month in a row in May and that now makes 4 declines in the last 5 months. That is normally stuff of recession.”
Stocks also remain under selling pressure due to issues causing a repricing of valuations. These issues include surging inflation, aggressive fed rate hikes, reducing or tapering of the Fed’s balance sheet, lack of stimulus support from the government, rising inventories, weakening retail sales, declining real disposable incomes, and high gas and food prices weighing on consumption.
Another major concern is decreased earnings, as the Fed hikes rates to slow economic growth, they risk putting the economy into a contraction. With consumers dependent on low rates to support economic growth via debt. Since earnings remain highly correlated with economic growth, earnings don’t survive rate hikes. As the arrows show Fed rate hikes lead to earnings recession.
During the previous four recessions and subsequent bear markets, the typical revision to consensus EPS estimates ranged from -6% to -18%, with a median of -10%. So far, those estimates have not fallen enough. While forward Price/Earnings ratios have declined, much of that is due to the decline in the Price and not the Earnings. Therefore, if an earnings recession is coming, as the data suggests, then the current bear market still has more work to do as earnings decline.
However, there is a positive side to these down markets and a potential recession. They present great times to invest your money while many securities are trading at a discount. Based on history, the evidence overwhelmingly points to great market returns over the next 1, 3, and 5 years, whether we have a recession or not!
“Go to cash and get out of the markets as you are going to lose all of your money….”
Negative headlines, for a fact, catch your attention twice as much as positive headlines, especially when it comes to the stock and bond markets. The media’s job is to sell their stories, and negative stories sell much more than positive stories. I have recently returned from 3 national economic/investment conferences, in which we had many experts speak to us on the current economy and investment markets. I would like to offer our clients and friends, balanced facts about the markets:
We, at Traditions Wealth, will continue to educate you on a balanced look at the facts. We also believe we could have a recession as early as next year in 2023, but are you at risk of losing all your invested assets - NO!
As a Fiduciary, always acting in your best interest, we will bring you more true data in the future. Please contact us with any questions at 979-694-9100 or
Summer time means time for a vacation! 90% of Americans plan to travel this summer, but with rising costs of gas and other expenses, vacations are easier said than done. Click on the link below for tips on how to make travel MORE affordable.
Oscar engages in investment research and portfolio modeling to aid and support portfolio management decisions made by Brien and Sarah for the TWA clients. His primary scope of analysis is ensuring that investments our clients hold are optimal given their risk level through diligent quantitative and qualitative research and assigning them buy, sell, and hold ratings.
Oscar is from Katy, Texas and currently a third year student at Texas A&M University working on his Masters Degree in Financial Economics. This spring 2022 he will have finished his undergraduate courses and his final year will be graduate coursework. After graduation, Oscar plans to get a job in the greater Houston area. His dream job one day would be to work for the Federal Reserve.
Oscar is 100% a fluent speaker, reader, and writer in Spanish. Spanish was his first language, and he even minored in Spanish at Texas A&M. He has also worked as a wedding videographer on the weekends since he was 15 years old with his parents in their photography and videography business. Oscar also enjoys fishing and the beach.
Keys To Prevailing Through Stock Market Declines
Traditions Wealth Advisors
Brien L. Smith, CFP®/James Lane
May 23, 2022
“The market is the most efficient mechanism anywhere in the world for transferring wealth from impatient people to patient people” Warren Buffett
“Thank you, clients, for being those patient people.” Brien L. Smith, CFP®
1. Declines have been common and temporary occurrences.
2. Proper perspective can help you remain calm
3. Don’t try to time the market
4. Emotions can cloud judgment
Howdy, my name is Braden Deras, and I’m a junior finance major from Keller, Texas, just north of Fort Worth and Dallas. Currently, I am involved on campus with the Kappa Sigma Fraternity, Texas A&M Consulting Club, Aggie Investment Club, and Order of Omega Greek Honor Society. I grew up playing football and baseball so naturally I am a huge Dallas Cowboys and Texas Rangers fan. In my free time I enjoy working out, golfing, and being in the outdoors. Coming to Texas A&M was not an obvious choice for me because no one in my family had ever attended A&M. After attending small private schools for most of my life, I knew that I wanted to attend a large university with plenty of people and opportunities. When I first toured campus during my senior year of high school, I found its culture, size, and reputation to be the most appealing of my college choices. After obtaining my bachelor’s degree in finance, I plan on attending graduate school to obtain a master’s degree in either a business or law field. On the more exciting side of life, I plan to check a few new things off my bucket list by doing as much traveling as possible as soon as I graduate. One thing not too many people know about me, I am the second oldest child in a family of eight. I have two brothers, three sisters, and three dogs. I am looking forward to learning a lot and serving the clients and staff of Traditions Wealth Advisors.
Traditions Wealth Advisors
Financial Analyst Intern
First Quarter 2022
Two major events overshadowed the first quarter of 2022: the sudden hawkish (high-interest rates) stance the Federal Reserve has announced and the Russia-Ukraine war that has contributed to persistent inflation.
On a positive note, the unemployment rate is at 3.6%, which is historically low. Jerome Powell stated that there are 1.7 available jobs for every person looking for employment. Meanwhile, corporate earnings have been strong throughout 2021. Earnings increased over 48% for the calendar year 2021.
Most recent inflation numbers show the all-items CPI up to 8.5%. Gasoline prices have increased 48% since this time last year. Inflation is still being carried by supply chain bottlenecks, high stimulus-induced consumer demand for goods, high shelter prices, wage growth, and rising energy prices.
Rise in Interest Rates:
In the bond market, bond yields have seen a steep rise causing a historical bond market selloff. The 10-year Treasury went from a yield of 1.52% on December 31, 2021, to 2.81% on April 25, 2022, an increase of 85%. The Federal Reserve uses rate hikes as a tool to combat inflationary issues. While lowering rates tends to promote economic activity, then raising rates is often a restraint. This is the Fed’s most often used and widely known tool to fight inflation.
Their secondary tool is to decrease the level of assets held by the Federal Reserve, also known as their balance sheet. During COVID-19, the Federal Reserve began Quantitative Easing (QE) efforts. QE usually consists of buying a large number of mortgage-backed securities, Treasury notes, and bonds. This was a strategy to add liquidity to the markets so banks could borrow and lend more freely. Now that inflation is here to stay, they plan to decrease the balance sheet by just under $100 billion per month in the near future. By doing this, other investors will have to purchase the government’s assets which will lead to higher rates.
It is important to keep a close eye on the Federal Reserve to understand its strategy for raising rates. On May 3-4, The Federal Open Market Committee will have a meeting to increase the federal-fund target range. Some experts are expecting a half-point (.50%) increase, but it will be interesting to see how the Fed handles this predicament.
Questions? Contact Brien at 979-694-9100 or
Source: EO-Booklet-2022-1Q.pdf (jamesinvestment.com)
Howdy, my name is Joshua Vernon and I am a first generation Aggie from Mission, TX. I am currently a junior at A&M (Whoop!) majoring in economics and minoring in financial planning.
After graduation I will commission as an officer into the United States Navy with plans to become a Naval Aviator. After my time in the service I intend to provide economic and financial planning support to the military community.
This summer I am excited to complete my military training and learn from my internship at Traditions Wealth Advisors. I will be spending time with an naval aviation unit at sea as well as serving as an instructor for incoming Navy midshipman in Great Lakes, Illinois.
Passionate is the word I would describe myself with. I believe in committing fully to the bigger purposes in one’s life and being “all in”.
One thing people wouldn’t know about me is that I competed for the Texas A&M rodeo team for two years in saddle bronc riding and steer wrestling.
Michael Pollick Last Modified Date: March 06, 2022
It can be dangerous to put all your eggs in one basket.
When it comes to metaphorical egg transportation, it is indeed advisable not to put all your eggs in one basket. For one thing, you may only have a finite number of "eggs" to lose, and that "basket" may not be the sturdiest or most stable in the wagon. The expression "Don't put all your eggs in one basket" generally means not to risk losing everything by pinning all your hopes or future goals on one and only one option.
The danger of keeping your eggs together should be obvious once the basket falls off the wagon or experiences some other unfortunate fate. Wherever the basket goes, the eggs must surely follow. In a metaphorical sense, investing all of one's time, energy, attention or money in a single endeavor can be a similar recipe for personal disappointment or even tragedy.
While a personal investment in a future goal is a laudable idea, few people can afford to take such a risk without some sort of safety net or fallback plan.
Another interpretation of this expression is often seen in the world of investing. Potential investors are encouraged to diversify their investments rather than put all of their money into a single, and possibly volatile, investment option. It is never advisable to put all your eggs in one basket when it comes to financial markets. Investors should have some money put aside in more stable funds to survive any sudden downturns in more volatile markets.
There are several stories concerning the origin of the expression, but it may have been inspired by the real-life experiences of poultry farmers who used wagons and baskets to take their eggs to market. If all a farmer's eggs were placed in one basket, it would only take one unfortunate accident along the way to ruin his entire investment. By not putting your eggs all in one basket, you reduce the risk of having nothing to offer at the market.
So when should you put all of your eggs in one basket…
Managing one’s finances is daunting enough but adding the complexity of planning across multiple providers/institutions can make it seem not worth the effort. Bringing all of your investments to one institution can help make life simpler and more convenient. A consolidated view of your accounts, with a single company or software that provides a complete view of your finances, can make it easier to track your asset mix, tax situation, and financial life. There could also be cost savings – consolidating assets with a single company may qualify you for lower fees/commission and access to enhanced services.
Here are some ways that consolidating your accounts could help streamline your financial life.
Macro view of investments
Whether it’s to provide income, long-term growth, tax-efficiency, or some combination, you want your investments to work together. However, this can prove challenging when you have investments in multiple locations. You could be duplicating exposure to certain asset classes, sectors, or investment types, or even taking unintended risks with concentrated positions.
When you consolidate, it’s much easier to take control of your strategy and keep your intended asset allocation on target. Rebalancing – a strategy that all diversified portfolios should be implementing – becomes a much easier task with an integrated view. Moreover, it is much easier to measure performance of your investment mix when it’s all in one place.
Comprehensive financial planning is growing in popularity and can address a variety of needs ranging from establishing an emergency fund to college savings to retirement income planning. The best financial plans are fluid and flexible, changing with your needs and goals. However, this flexibility may be greatly reduced if your investment accounts are spread across multiple platforms, limiting the ability to put together an aggregate view of your investment mix.
Additionally, if you have more than one IRA account held at different institutions, it may be harder to track the amount you are required to withdraw when the time comes at age 72.  You’ll also be faced with the decision of which account(s) you want to take that withdrawal from. With all your accounts under one roof, it could be easier to evaluate and implement an optimal withdrawal strategy during retirement.
Like anything, it pays to do some homework before making the jump to consolidation. Fees should always be a consideration, and you’ll need to make sure the benefits outweigh any potential costs. You’ll also want to consider whether consolidation will mean liquidating certain investments, and possibly incurring tax consequences. You should evaluate how your accounts are kept safe, and if SIPC protection or FDIC insurance is offered.
Though it may be hard to ignore the mantra of “not putting all your eggs in one basket,” the potential benefits of consolidation may be worth your while. You may find it easier to diversify, maintain your asset allocation, lower costs, and improve tax efficiency. Most importantly, you’ll be able to plan more effectively and take control of your finances.
If you would like more information contact Brien or Sarah at Traditions Wealth Advisors: Brien@TraditionsWealthAdvisors.com