It's tough to tell with any level of certainty when the market hits bottom and reverses course to the upside. With that in mind let's review the damage with YTD returns; S&P 500 Stock Index -13%, Nasdaq -21.2%, Small Cap -14.3%
International EFA -14.4%, Emerging Markets EEM -15.2%.
Why so negative?
- Inflation
- Supply chain shortages
- Slowing economic growth
- War in Ukraine
Why not sell our stocks if things are so bad?
- The economy is forecasted to grow at 3% in 2022
- Corporate profits will average +7-9% this year
- Unemployment rate down to 3.6%
- Wages up 5%
- P/E down to 17.5x forward earnings
In our last communication, "Dividends & Inflation", we mentioned our strategy, to be patient and opportunistic, especially in difficult markets like today. That is exactly what we will continue to do. High-quality companies bought after price reductions usually provide the highest returns 2-3 years out. As always please do not hesitate to call or email if you want to discuss your specific portfolio, the financial markets, or the economy.