From the beginning of the year, broad market indexes have flirted with and dipped into bear market territory by posting losses of 20% or more. Today, the market will move full percentage points in a day seemingly as a regular occurrence. Many investors now find themselves asking – have we hit bottom or is there more to go?
The elephant in the room, the American economy, is being asked to support itself without any additional outside assistance. The Federal Reserve has begun to raise interest rates in an attempt to fight inflation. Concurrently, the Fed is challenging the market by reducing its balance sheet in a process known as quantitative tightening. Stimulus from the COVID days have started waning, and the economy will be tested to stand firmly on solid ground. These pressures apply short-term pain on markets with the promise of future reward. Current conditions force innovation, create opportunity, while also demanding patience.
Expect additional volatility as markets sort through waves of information. A balanced approach through bear markets has consistently been a path to prosperity for those who can weather the storm. Today, we are leveraging every research point to make sure that your long-term future is well positioned for success.
We see fixed income and value-based companies to lead the recovery from the bear market. Fixed income does not have to grow its way out of the current pressures, it simply must mature to normalize. Value companies offer dividends to smooth out the dips from sell offs. Growth currently represents buying opportunities and will eventually return to the spotlight.
We are optimistic about positive trajectory in the long-term. Over the next few months, expect some additional turbulence as the economy begins to test its new landscape. Headlines may shift whether the market news is green or red for the day, but that involves measuring a long-term goal with a short-term view. We are always available for your questions.
Best,
Garrett
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
All investing involves risk including loss of principal. No strategy assures success or protects against loss. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.