"Did you feel it?" "What?" I replied. "The earthquake... it shook me out of the bed last night?" my client replied. I had not felt it and honestly didn't even know Dyer County had two earthquakes early that morning. When my next client walked in, I asked them and like me, they had no idea.
This is how I feel the market conditions are today. When I ask people how they feel about the market in general, some people have felt it and to my surprise, many have not. I think that is going to change soon when investors get their statements in June and realize this is not going to be a short pull back like early 2020 but rather could be a drawn out draw down like 2000 - 2002.
As I mentioned in my previous blog from April, rates are rising and this is affecting everything. When the economy is too good, prices rise (inflation) and the Federal Reserve will raise rates to slow down the economy. In this case, the Fed is in a very tight spot. If they raise rates too fast, we likely experience a recession and if they raise them too slow, inflation will continue to rise at an alarming rate. By the time this blog goes through compliance, you will likely know how much the Fed raises rates on Wednesday (6/15/22).
As a financial advisor, these are the most difficult times to manage money and client expectations. It is rare that almost all asset classes are down simultaneously. However, that is where we are today. As you can see below, there just has not been anywhere to hide this year.
NASDAQ 11,340.02 -27.5%
S&P 500 3,900.86 -18.1%
Dow Jones Industrial Average 31,392.79 -13.6%
U.S Aggregate Bond Index 2,004.42 -10.65%
SPDR GOLD shares (GLD) 174.54 +2.09%
Returns are as of close 06/10/22, source Wall Street Journal
Besides the continued record inflation, supply chain issues, the war in Ukraine and the Chinese shut down... a little event will be happening this November. A Republican senate, house or both would likely create grid lock but would slow or hopefully stop the record federal spending that we have experienced the last few years. Government spending and an increase in the money supply creates inflation as well as cheap money (low rates).
As this is a public post and readers have different risk tolerance, age, financial situation, etc... I can not give recommendations or advice. However, if you would like to sit down to discuss your investments and/or your financial plan, please call Kim to schedule an appointment. Getting a "check up" every once in a while is not a bad idea and all it will cost you is time. Regardless, duck and cover because the earthquake may just be starting.
Until next time, Cheers!