Employment Explanation | Wisdom, Wealth, and Wellness

Jonathan Satovsky
CFP®, ChFC®, CIMA®, CPWA®, CDFA®, DACFP

Good morning, good afternoon, good evening. Depending on the part of the world you’re in. This is Jonathan Satovsky of Satovsky Asset Management and on today’s episode of “Seeking Wisdom, Wealth, and Wellness,” I want to talk about explaining headlines and inverse reactions.

What I mean is that employment, jobs, and payrolls are up, meaning more people are being hired and wages are up. These are all seemingly positive for the population, yet the financial markets look at that news negatively and start selling off.

Why would that be? Let’s talk about it.

Two facts.

  1. It means labor is tight and there’s pressure on wages, which means profits and margins might be shrinking a bit.
  2. When things get too hot, the Federal Reserve tightens the money supply. Tightening things, pulling back the amount of money and liquidity in the economy, and hence, conditions can only go in the opposite direction where it eases up a little bit. You don’t want things too hot or too cold. You’re trying to find the right pace so that things don’t get heated up and out of control.

So that’s a quick explanation of why good news could bode for negative markets and bad news may bode well for financial markets in the short term. In the long term—at the end of the day–cheap, small, profitable companies, being persistent, and sustainable over a long period of time, work over time—not all the time.

Have a great day.

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Video Recorded June 3, 2022
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Disclosures

This blog post is not intended to be, nor should it be construed or used as, an offer to sell, or a solicitation or offer to buy any securities or interests in any strategy offered by Satovsky Asset Management, LLC (“SAM”). SAM is a registered investment advisor with the Securities and Exchange Commission – for more information see www.adviserinfo.sec.gov. Please remember that different types of investments involve varying degrees of risk, and that past performance is not indicative of future results. Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the strategies recommended or undertaken by SAM) will be profitable. Market index information shown herein is included to show relative market performance for the periods indicated and not as standards of comparison. The market volatility, liquidity and other characteristics of SAM’s portfolio composition are materially different from the securities listed on public market indices. Market index information was compiled from sources that SAM believes to be reliable. No representation of guarantee is made hereby with respect of the accuracy or completeness or such data. Opinions are as of date of video and are subject to change. A copy of SAM’s current written disclosure statement discussing our advisory services and fees continues to remain available for your review upon request. SAM undertakes no duty to update information presented herein.

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