Watching Global Economic Trends

While observing domestic and global economic activity trends, an investor would be well-served to keep in mind their specific investment time horizon.  Particularly in the case of assessing an economic recovery, precise timing is important for investors with a short time horizon because discrepancies between short-term economic indicator expectations and results can cause significant volatility in equity and debt markets.  Investors with a longer time horizon, however, can take advantage of the fact that they don’t need to be precise in timing a recovery, and can therefore benefit from purchasing at relatively low prices even without perfect foresight.  In the current economic environment, we are witnessing some positive trends, even while the timing of a full economic recovery remains unclear. 

As this article notes, “service industries expanded in September by more than forecast as faster growth in new orders and a pickup in employment pointed toward a better pace of recovery.”  Watching economic recovery trends can provide helpful context when making strategic and tactical investment allocation decisions, but perfect timing is not required with a reasonably extended time horizon.

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- Anthony Winkels is Managing Partner and Wealth Advisor at Fortis Wealth Management