Key Events: The World Cup, Crypto and Turkey teach us about risk
The release of the minutes from early November’s meeting was the key economic news of the week; several officials concluded that rate hikes might soon slow down. The cryptocurrency crisis continued as the FTX bankruptcy unfolded and crypto lending company Genesis suspended withdrawals.
On Tuesday, Saudi Arabia, the world’s 51st ranked soccer team, beat Argentina, who was ranked #3 in the world and was on a 36-game unbeaten streak.
Finally, Thanksgiving feasts were enjoyed by many.
Market Review: Federal Reserve minutes are received well by the markets
The Fed minutes gave a bit of positive momentum to an otherwise lackluster week. The S&P 500 finished the week up 1.6%, while bonds gained slightly across the board.
Outlook: Thinking about risk
You may wonder why I mentioned Thanksgiving dinner as a key event. There are many ways to keep a turkey moist, but you need to stick with your plan to cook your bird correctly. Staying with your skillset is also part of sound financial risk management; we make sure managers stick with their tried-and-true recipes.
While we’re thankful not to have crypto exposure, fraud happens, and sometimes smart people get fooled. A second risk-management principle is to avoid over-allocating to any investment; keeping positions from becoming too large is key.
As the Saudi Arabian win shows us, unlikely things happen. The third risk-management principle is to remain diversified rather than trying to time the market. It is important to be positioned to capture gains even if, as in today’s environment, they don’t seem incredibly likely. As you can see in the chart below, a balanced approach usually serves you well.
The World Cup, crypto, and turkey can all teach us about risk management. The most important aspect, though, is to stick with your long-term plan.
Navigator Outlook: November, 2022
This material is intended to be educational in nature, and not as a recommendation of any particular strategy, approach, product or concept for any particular advisor or client. These materials are not intended as any form of substitute for individualized investment advice. The discussion is general in nature, and therefore not intended to recommend or endorse any asset class, security, or technical aspect of any security for the purpose of allowing a reader to use the approach on their own. Before participating in any investment program or making any investment, clients as well as all other readers are encouraged to consult with their own professional advisers, including investment advisers and tax advisors. OneAscent can assist in determining a suitable investment approach for a given individual, which may or may not closely resemble the strategies outlined herein.