It’s been a little over a month since the war broke out in the Middle East, and since then, there has been a lot of uncertainty, stock market volatility and sky rocketing oil prices. Whenever there are geopolitical events, it is normal to feel nervous and you are not alone if you are concerned how the rest of the year will go. As your financial partner, we want you to know there is so much we are doing behind the scenes to manage your portfolio and wealth.
Monitoring
We are always monitoring what is going on in the world, the US, the economy and the markets. Especially right now, we are keeping a close eye on things and listening to our economists through our partner, Carson.
As long as the war in the Middle East continues, we will see an impact globally. The United States is oil independent, but much of the world is not. The Strait of Hormuz in Iran is mainly closed (at the time I’m writing this) and 20% of the global supply of oil runs through this Strait. It will continue to impact the entire globe if countries can’t get access to their needs and the shortage of barrels continues. Oil prices have risen to more than $100 a barrel for the first time in 4 years.
The market is down year to date, and this isn’t surprising as a war broke out at the end of February. When we look at past geopolitical events, the market typically reacts negatively within 1 month afterwards. But when we look 12 months after a large event, the market is actually positive 65% of the time. Take a look at this chart to see how the market has reacted to past historical events over 1 month, 3 months, 6 months and 12 months.
We’re also paying close attention to company profitability. At the end of the day, the stock market is made up of businesses, and their ability to generate profits tends to matter far more than short-term headlines. Right now, corporate earnings remain strong. That said, rising oil prices could put pressure on margins, as higher transportation and production costs impact many companies. We’re also watching trends in business investment. If companies begin to pull back on spending or acquisitions, it can create a ripple effect across the broader economy. These are key indicators we continue to monitor as earnings reports are released.
Rebalancing
Rebalancing is a key component of our long-term investment discipline. You will always find us rebalancing our clients’ accounts and taking risk off the table after strong market returns. The last three years, the market had strong returns and we’re rebalancing and taking risk off the table throughout this three year run.
One thing I want you to remember is we utilize a “bucketing strategy” at Bloom Wealth Advisors. For all of our clients nearing retirement, in retirement, or taking money from their portfolios, we have a robust bucketing strategy in place to account for short-term liquidity needs. We allocate our clients’ portfolios in three buckets:
Short Term: Money you need in the next 0-3 years is in your short-term bucket that is not invested in stocks but is in ultra short-term investments.
Intermediate Term: This is money you need in the next 4-9 years. This bucket is typically short-term to intermediate-term bonds and other investment vehicles not as susceptible to market volatility.
Long Term: This is money you need in 10 plus years. This is the bucket we take the most risk with because we need your money to keep up with inflation, taxes and health care expenses down the line. This is the bucket that is invested in the stock market and is most susceptible to market volatility.
Part of our investment discipline is monitoring and adjusting these buckets as your liquidity needs change and you withdraw money from your portfolio. When we rebalance, we are always adjusting these buckets. We’d be happy to talk with you about your bucketing strategy and liquidity needs if you have questions.
Looking for opportunities
Part of our job is to look for opportunities and threats through all global and economic changes. The markets change quickly, which is why we are active investors. However, we aren’t chasing short-term, reactionary news. We have a long-term investment discipline and we make tweaks along the way depending on what opportunities and threats we see. Take a look at this chart, it shows the top market performers over the last 15 years.
Look how many of them change over time. This is exactly why we believe in diversification, it’s impossible to know what the top performers will be every year.
Along with diversification, we always look for what opportunities and strategies are available to you. We added a new strategy in 2025, called a buffered ETF strategy. This strategy is in our intermediate bucket and is a strategy with some market downside protection. We have a small portion of some of our clients’ accounts in this strategy with all of the recent market volatility and it provides 12 month guarantees. For those of you who like more information on the investments, reach out and we’d be happy to discuss this new strategy with you.
Hand Holding
It’s okay if you feel nervous and want some extra support! Part of our job is to “hold your hand” and walk with you through market uncertainty. Watching your account balances change every single day can feel stressful for some people and it can bring up emotions. Our job is to NOT invest on emotions, and this is why we have our long-term investment discipline. If you want some extra hand holding, don’t hesitate to reach out to us and we can explain your bucketing strategy and how your portfolio is individually invested for you and your goals.
We’re Here For You
Remember, your portfolio is aligned with your overall Wealth Plan and financial goals. Investment management is just one piece of the value we provide for you. In addition to investment management, we are assisting with retirement planning, tax strategy, legacy plans, goal planning and so much more.
Reach out to us if there is something we can be doing to support you during this time or any time of your life.
If we aren’t already working together, why not? Reach out to learn how Bloom Wealth Advisors can add value to your life.
Thanks for reading and I hope you found it valuable and insightful.
