In the intricate dance of economic cycles, the terms "soft landing" and "no landing" represent divergent paths with profound implications for economies worldwide.
In this blog, we’re breaking down the distinction between these two scenarios to better understand their significance in shaping the economic landscape, as well as discussing ways to help protect yourself against market volatility.
Despite the U.S. economy taking another small win following the highest inflation level in more than 40 years, some investors feel that the economy isn’t out of the woods yet. According to Citi’s chief US economist, Andrew Hollenhorst, the soft-landing dream is over, as it’s just not showing in the data.
Instead, the economy may be heading for a recession in the middle of 2024. This comes with the chance of the central banks achieving a “no landing” scenario. If that were to be the case, the economy would continue to grow, and inflation would remain high.
A soft landing embodies a scenario where an economy gracefully transitions from a phase of robust growth to a more sustainable pace without hurtling into a recession.
Key characteristics include:
In contrast, a "no landing" scenario describes an economy that struggles to find its equilibrium, oscillating between periods of growth and contraction without achieving sustainable stability.
Key features include:
A soft landing represents the more desirable outcome, offering stability and sustainable growth, as a "no landing" scenario poses significant challenges and risks:
Protecting yourself against potential market volatility is essential to managing your investments and financial well-being. While you cannot eliminate all market and economic risks, you can take several steps to help mitigate the impacts on your portfolio. Here are some strategies to consider:
During periods of uncertainty, the guidance of financial advisors can be particularly essential. Fluctuations in the market, influenced by economic uncertainties, geopolitical events, and unforeseen crises, can unsettle investors, especially those nearing retirement.
Financial advisors leverage their experience to provide invaluable advice on navigating these turbulent times. They assist in making well-informed decisions, crafting diversified portfolios aligned with your risk tolerance, and devising strategies to help protect your investments during market downturns.
However, not all financial advisors are made equally.
Out of the 330,300 financial advisors in the U.S., there are approximately 15,114 Wealth Preservation Specialist investment advisors. Any advisor registered with the SEC is legally required to abide by Wealth Preservation Specialist duty and, as a result, must put clients’ interests ahead of their own. According to the SEC, Wealth Preservation Specialists are expected to exercise a duty of care and a duty of loyalty to clients, and as a result, are “held to the highest standard of conduct.”
Working with an advisor who abides by Wealth Preservation Specialist duty gives you the assurance of knowing they’re legally obligated to put your interests first. While a Wealth Preservation Specialist can still have conflicts of interest, knowing that they have a duty of trust and loyalty to you, the consumer, can give you some peace of mind.
Partnering with a Wealth Preservation Specialist advisor equips you with a trusted ally to help you navigate market volatility and stay focused on achieving your long-term financial objectives. Here at NJM Wealth Preservation Strategies, Nicolas J. McLeod, is a true Wealth Preservation Specialist. Nic and his team operate by a code of ethics that proudly offers you knowledgeable, honest financial advice - as we believe you deserve nothing less.
In the world of economics, the trajectories of soft landings and no landings represent starkly contrasting scenarios with far-reaching implications for economies and societies. While the former embodies stability, resilience, and sustainable growth, the latter entails volatility, uncertainty, and persistent challenges.
By understanding these distinctions, policymakers, businesses, and individuals can better navigate the dynamics of economic cycles and strive for a smoother path toward prosperity and stability.
If you would like to learn more about volatility protection strategies and preserving your wealth for future generations, contact us here today to set up your complimentary consultation.