Attempting to keep it brief, I want to focus not on the markets but on investor psychology. Again, this is NOT a “don’t worry it will be better” rah-rah speech. Just because it may (and probably will) eventually get better doesn’t mean everyone can withstand the ride. Some flights are just too turbulent. Investing is like that. The old adage is to “sell to the sleeping point”. Hopefully you aren’t in that position but if so, I would rather make incremental moves than all or nothing decisions. As the markets downward movement drags on, the real carnage is the same as it always is. The overly aggressive, the under diversified, the “new age guys”, and the stupid get wiped out. Day traders, SPAC traders, Instagrammers, and all the newly smart in 2020 are gone (both emotionally and financially). The markets are doing what they always do…. return the investment landscape to the seasoned, the smart, and the balanced.
Yes… the market is crappy. No… it is not fun. But if your strategy is sound and your portfolio solid, this period in the market will be like 2000, 2008, and 2020. Not enjoyable but all part of the history in which you meet your financial goals and generate reasonable return on your investments. You see… the smart investor plans for the inevitable turbulence and builds for it. We cannot out guess it, we cannot jump in and out for it, we tactically manage through it.
Looking ahead…. as Jay Powell and the Fed embark on taking away the free money punch bowl, the markets will remain volatile. The equity markets are the predictive metric and are always out in front of the realities. Yes… recession is clearly on the table (that’s why the markets are down). Personally, I feel it inevitable. But…. as the tightening continues, at some point, the markets will actually turn up. Won’t be a head fake like we have seen twice, but the real move. It will happen fast. Normally a 1/3 retracement to the upside will occur in a very short period of time. That’s the reason market timing doesn’t work. While people debate it, the turnaround will be in full momentum. The markets will recover…. Many individual stocks will not. Creative destruction is an economic term we will become more familiar with (but that’s a topic for a future ranting).
As always, thanks for listening. Your feedback is always encouraged, and we are always available to chat further. All our best,