Monthly Note

I hope everyone is doing well and been enjoying the fall weather.  Before I get into the markets, it’s October so I will be reaching out about Required Minimum Distributions (RMDs) to clients that are over 72 in the coming 45 days.  

Unfortunately, I don’t have much good news.  I sent a letter about 10 days ago and little has changed since then.  The markets are down a bit, but the actual situation is little changed.  3rd quarter statements will be coming out and for most they will be the ugliest of the year, please contact me if you have any questions.

During market downturns that get particularly ugly, like this one, the markets eventually reach a state where the potential for future downside (further loses) is outweighed by the potential upside (future gains).  To put that in simpler terms, the questions become, “How much further could the market drop? vs. What is the likelihood the market will be higher 12 months from now.”  I can’t provide concrete answers to those questions, but if I had to guess, we could possibly be down another 10% before we reach an absolute low, and the likelihood that we are up 12 months from now, is high.  It gets real scary at the bottom, but I think we’re close.  It’s very important that we’re there for the recovery.

The good news is that we are about 10 months into this.  That is a lot of time for underlying weakness in the markets and the economy to manifest and that simply hasn’t happened.  The drop we’ve seen isn’t crazy, the situation with inflation, the war in Ukraine, and all the COVID induced supply chain issues have been a tough pill for the markets, but the underlying economies have proved surprisingly resilient.

We saw an incredible surge in the markets through COVID (2020-2021).  That surge was probably wishful thinking and we’re just now seeing the long-term impact of COVID on the world economies.  It has been rough, but it will get better.  Call anytime or schedule a time to come in.

Opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. 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. Because of their narrow focus, investments concentrated in certain sectors or industries will be subject to greater volatility and specific risks compared with investing more broadly across many sectors, industries and companies.