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There are normal cycles in seasons, life, and of course markets. This summer is no different. Layered onto this cycle is the added pressure of war in Ukraine, inflation, higher interest rates, and continued pandemic associated disruptions.
Financial writers and commentators use the phrase “the summer doldrums” every year to describe the period between the beginning of summer and Labor Day (July – August). Normally this period of time is associated with low trading volume and poor performance as many Americans are on vacation.
Considering the normal cycles and with all the added pressures layered on, the best-case scenario is that the Feds will continue to raise interest rates to curb the inflation monster. This means short term pain for long-term gain. Expect continued volatility during future rate hikes.
It is normal to feel anxious during times of stress. Stay the course—focus on your goals, not your account balance. If you get nervous and pull out during the down days, you risk missing the best up days.
Avoiding the market’s downs may mean missing out on the ups as well. 78% of the stock market’s best days occur during a bear market or during the first two months of a bull market. If you missed the market’s 10 best days over the past 30 years, your returns would have been cut in half. And missing the best 30 days would have reduced your returns by an astonishing 83%.
On a personal note, although we have come a long way from rising death tolls, mass hospitalization, and paralyzing fear, COVID is still not fun. My husband and I just recently had COVID—one of the many variants spawned by the original novel coronavirus. Probably Omicron something or other. We were both vaccinated—and double boosted—Pfizer for him and Moderna for me. We cancelled life as we knew it for 2 years and then at the end of last month, we both came down with it. I tried the anti-viral and it cut my time testing positive to 3 days. But the recovery time for both of us has been 10 days and counting. Stay safe, stay the course, enjoy your summer, and call if you need us.