Friends
We all know the first half of 2022 is one we would sure like to forget about with regards to the markets (well, with regards to a lot of things but I’ll stay focused). We haven’t seen both bonds and stocks fall like this since 1970 (that’s a long time ago). Stocks, as measured by the Vanguard Total Stock Market Index were down about 22% (Nasdaq was down nearly 30%). Bonds as measured by the Vanguard Total Bond Market Index was down nearly 11% (Vanguard’s Longer Term Treasury Index down more almost 21%). None of these numbers are official, but you get the point. We’ve pointed out the headwinds that markets would face since last Thanksgiving when the Fed announced their policy pivot. The markets are going through a great repricing-as inflation and a hawkish (unfriendly) Fed are headwinds that investors have not had to tangle with in decades. And, as we have pointed out, this is going to take some time to all play out.
As for today, by the close the Dow Jones Industrial Average was down 253 points to finish the day at 30,775. The S&P 500 was down 33 points to close at 3,785. The Nasdaq Composite Index was down 149 points to close at 11,028. Gold was down $10 to trade at $1,807 per ounce, while oil was down $4.07 to trade at $ 105.71.
On the positive side, it does appear that the Fed’s actions are beginning to affect demand and on the supply side of the equation we have seen a sizable drop in commodity prices from their earlier highs. It is possible that inflation will lessen in the coming quarters which could allow the Fed to back off slightly. But economic data is likely to be inconsistent and choppy for a while which will likely lend to more angst among market participants. Again, this bear market period is going to test investor patience. If it is like every other bear market, stocks will recover and go to new highs eventually. They always have. But this bear market will test investors conviction to stick to their long-term game plan. We will be here every step of the way to make sure you are able to stick to your long-term financial game plan and come out on the other side of this, just as we did in 1987, 2000-2002, 2008, 2018, 2020 …
Have a nice evening everyone.
