Justin’s Market Musings | July 5, 2022

As we close out what has been a pretty rough first half of 2022, I can’t help but observe some of the biggest headlines in the media this morning. I keep seeing “worst first half,” or “worst start to the year” or similar headlines. For statisticians, I think this is quite notable. For long-term investors, this is just noise. Is it worth noting? Sure. Is it important to keep this in mind as you (reluctantly) review your monthly statements? Sure. But, unless you are cashing out your entire portfolio in the very near future, this is just not an important data point. What if the 2nd half of the year is pretty good, and we finish the year with modest declines? Will we look back and say “yeah, but what about the first 6 months!”? Of course not.

The simple reality is that the markets average positive returns roughly 75% of the time.[i] The markets were significantly higher in 2019, 2020 and 2021. Simple averages will suggest that 2022 “should” be a down year. And, with the above-average returns in the last 3 years, it makes sense that 2022 could be a little worse than the average negative year. At the moment, despite unsightly statements and alarming headlines, the current environment makes some sense, especially given the major “macro” events that have popped up in 2022, including significant inflation and a war in Eastern Europe. We’ve seen these things before though. They are not unprecedented.

Hang in there. Markets will figure this stuff out sooner than most expect


The 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. All indices are unmanaged and may not be invested into directly.
[i] According to First Trust: S & P 500 Index. Although stock market returns fluctuate significantly, since 1926, the S & P Index produced positive returns 74% of the time, with an average of 21.3%
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