Lately, many of us have noticed the sharp increase in oil prices every time we stop at the gas pump.
Earlier this year, oil traded around $60 per barrel. Today, it’s hovering closer to $100 per barrel. That’s a significant increase in a relatively short period of time.
Historically, when oil prices rise 75% to 100% compared to the previous year, a recession has often followed.
That said, it’s important to keep the bigger picture in mind.
The stock market can experience a 5% to 20% pullback and still not be in a recession. Market volatility is a normal part of investing.
A recession is typically defined as two consecutive quarters of negative GDP growth.
While rising oil prices can sometimes signal economic pressure ahead, they don’t guarantee that a recession is imminent.
This is what I’m reminding clients and friends during periods of volatility:
· Stick to your investment plan. Focus on higher-quality companies rather than speculation.
· Don’t follow headlines. Headlines often chase trends, and not all trends provide quality information.
· Trust the plan. If you have a financial plan, it already outlines spending, investing, and long-term milestones.
· Make short-term adjustments if needed. Small spending changes can help offset higher fuel or living costs.
Volatility often tests our emotions more than our strategy. A good plan helps remove emotion from decision-making and keeps you focused on long-term goals.
Just last week I spoke with a client and friend, Brent, who was concerned about recent market headlines. After reviewing their financial plan, we realized nothing about their long-term goals had changed because of headlines or prices at the pump.
The goal of a financial plan isn’t to predict every economic event — it’s to prepare for them.
If you’re feeling uncertain about your investments or financial direction, it may be a good time to review your plan. A quick conversation can help bring clarity and confidence during uncertain markets.
- Peyton
P.S. - Here are a few things I am reading/watching/listening to:
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