Realistically, it doesn’t matter who is right. The pain is real and as of June 16th, 2022,
- The S&P 500 was down over 23% on the year
- The US Aggregate Bond index was down over 12%
- Inflation was at a 50-year high
- The war in Ukraine raged on
- The Fed was tightening rates in the midst of a bear market.
Considering all of these factors, it’s easy to see why the University of Michigan's current economic conditions index hit a 70-year low in June.
Fast forward from this pessimistic reading to today and roles have reversed. Since the middle of June, nearly every asset class has rallied. Equity markets have recovered between 15-20%, Bonds have rallied, and long-term treasury rates have plummeted from the mid 3’s to the mid 2’s.
While this may or may not be a head fake. It’s a great reminder that the stock market is not the economy. The stock market is a leading indicator of how the economy will look in the future. It’s also why we preach plan-driven investing with a long-term approach. You never know how and when financial markets are going to react, but if you’re plan-driven and have a long enough time horizon, you may have an opportunity to take advantage of future price dislocations.
From an allocation perspective, we remain slightly overweight on equities and neutral on bonds and cash.
As always, we are happy to connect if we can help you or anyone you know.
Thanks,
Frank Vance
Retirement Capital Advisors
800 Battery Ave SE
The Battery, Suite 100
Atlanta, GA 30339
Office- 412-722-3795
Securities and Advisory Services offered through Commonwealth Financial Network®, member FINRA/ SIPC, a Registered Investment Adviser.