It’s been a hard year and not the one many hoped for coming out of a two-year pandemic! Unfortunately, the solutions to our economic problems in 2020 and 2021 are now the catalysts for the terrible year we have had so far in 2022.
It has been a volatile start to the year.
We’ve had 30-year highs in inflation, interest rate increases, Covid, the Ukraine/Russia conflict, and China lockdowns. There’s even talk of a European recession next year and potential American recession in late 2023. All of this has caused negative returns in every asset class, especially in the tech space and smaller companies.
We know that staying the course isn’t easy for many investors. These are difficult times for the world. There’s a lot of uncertainty. During periods like this, it helps to have something to believe in.
In contrast to last week, this week has been a welcome change in the markets. After the Federal Reserve’s announcement of infinite quantitative easing, rumors of an agreement on a $2 trillion U.S. fiscal plan caused the U.S. stock market index to jump this week.
It’s difficult to see negative headlines every day and see markets continuing to slide without it affecting our emotions. In fact, our brains are hard wired to make place a value on emotion during times like these.
This week, the sell-off continued and after today’s (March 11th) loss, we are now officially in a bear market (a loss of 20% or greater) for the first time in 11 years!
It may be scary while you are in the middle of it, but history demonstrates (again and again) that global disease outbreaks have very little effect on the market in the medium to long term. The Coronavirus doesn’t impact our view of what the markets are going to do in the next five, 10, or 20 years down the road.