Summary Video: Click here (<3.5 minutes)
Fall in Texas is not marked by cooler weather, but rather the onset of football and… more football. While the seasonality of football (and pumpkin spice) remains predictable, the markets and economy continue to be anything but. The rollercoaster, which began nearly 18 months ago, rolled through the third quarter of 2022 with slightly fewer bumps, but there were still some tumultuous swings with inflation creating the strongest drag. As the negative news dominates headlines, it’s important to also recognize the positive news. Capital markets do not offer simple binary outcomes–good or bad, up or down. Rather, there is always a range of possible outcomes with varying pros and cons. Yes, one of these possibilities is a bear market, but if, when, and the duration cannot be predicted. Q3 GDP was estimated at 2.9% as of October 7th, but midterm elections and Q4 inflation data will be the two biggest catalysts to close the year. Instead of speculating on what happens next, let’s cut through the noise, and discuss some relevant data points.
Periods of market decline feel like they drag on and on… but when you compare the duration of bear markets to bull markets, the former only last a fraction of the time. It’s like 10 minutes on a treadmill compared to 10 minutes watching a great movie. It just feels longer! It takes more discipline to stay on the treadmill, but the outcome is worth it. Today, as always, there are reasons for concern about markets and investments, and there are reasons for optimism. Life is never a predictable straight line, rather a journey with variability and ups and downs. Continue to focus on your family’s financial plan, and control the things you can, allowing the inevitable bumpy years, like 2022, to smooth over time.
Sources: Q3 2022 Index Returns dimensional.com, Midyear Outlook 2022, wsj.com Lumber Prices Fall to Around their pre COVID levels 9-27-2022, wsj.com China Calls for Cease Fire 9-21-2022, First Trust How did Sectors Fare During Periods of Elevated Inflation 9-27-2022, Federal Reserve Board of Atlanta GDPNOW 10-7, Fred.com M2 Money Supply, BLS.gov
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