Probing the meaning of ‘slightly unfavorable’

I read a pretty good bit. It started as a child reading The Hardy Boys books. One summer I read enough books to win the “You Read The Most Books Over The Summer” award. There is a saying that imitation is the sincerest form of flattery, and at some point I began to write, probably as a natural progression of being an avid reader. I also can type almost as quickly as I can think of the words (almost). I was the only student in my AP English class to make a 5 on the AP English exam. I tested out of all English classes at Vanderbilt. 

In my adult life, I’ve spent a good amount of time in front of my computer for work, preparing sermons, and reflecting on people, events, and relationships. I have written two books: Finances, Family… & Faith – An Understandable Guide to Life’s Priorities and Seven Steps to Serious Money. Today I was introduced to a phrase in a stock market research report that I don’t recall ever hearing or reading: “Slightly unfavorable.”

Here’s the sentence: “LPL Research still views the near-term risk-reward trade-off for equities as slightly unfavorable given the technical setup, unfavorable seasonality, election uncertainty, and geopolitical risks” (Equity Strategy, Jeffrey Buchbinder, CFA – chief equity strategist at LPL Financial, Sept. 11, 2024). Having read the phrase many times now, the phrase doesn’t jump off the page at me like it did in my first pass. It seems a little similar to “almost never” or “sometimes always,” phrases where the reader has to develop a baseline and then subtract by the qualifier. It’s sort of like the directions we used to give in the country in Mississippi – “turn right about a half-mile before you get to where that huge oak tree used to be.”

It’s not uncommon for words and phrases to be made up today – company names, website domain names, campaign slogans, nicknames, and product names. Dictionaries can be updated very quickly nowadays since we don’t have to wait for the newest version of the Encyclopedia Britannica to be printed, sold, and delivered to our homes. Change is rapid, compounding, and unending.

And so we turn to the sentence above – what does it mean? It means that in the near-term, LPL Financial says stocks are a little expensive at this time compared to the risk-free return available in government treasuries. Does that mean that you should sell out and wait for a pullback? Probably not. Does it mean that you should wait to buy? Maybe. 

There are multiple factors that go into answering both of those questions such as: What are the tax implications of making the sales? What is the timeframe for the invested assets or account? How much price fluctuation can you stomach on an emotional and psychological basis? What is your overall portfolio allocation target and how might changes affect that asset mix?

It is human nature to “do what you know.” But, growth occurs when one discovers that which he does not know, seeks advice or counsel, makes decisions based upon an analysis of current information combined with one’s existing intellectual framework and experience. For Gulf and Franklin county readers of this paper, I am enthusiastically optimistic that this can occur.

Gulf County resident Walter L. Woodrick is a certified financial planner practitioner, and the author of two books. His website is WoodrickFinancial.com, and his text number is 850.724.1369. Securities and advisory services are offered through LPL Financial, a registered investment advisor, Member FINRA/SIPC. The opinions voiced in this article are for general information only and are not intended to provide specific advice or recommendations for any individual. #629364-1