Investors are nervous – We are turning optimistic however!
Investor concerns are plentiful:
The Russian Ukrainian war, persistent inflation, rising interest rates, economic growth slowing and high valuation in parts of the market. The S&P 500 Index is down 13% from its high in January, with most of the decline occurring in April.
Is a recession on the horizon?
The “R” word is being used recently in more and more investment commentaries. The possibility of a recession is clearly rising for 2023, however we do not believe one will occur in 2022. The Federal Reserve Board the “FED” is at the beginning of a monetary tightening cycle by raising interest rates. Higher interest rates are intended to slow demand and thereby reduce inflation. In so doing if demand slows too much, the economy could easily shift into a recession.
We are optimistic about the stock market for the next 18 months! REALLY? Yes we are!
Investor and consumer sentiment indices are approaching extreme negative readings. And when this occurs, almost with out exception, markets reverse and turn positive over the subsequent 18 months. When the negative components of the future outlook begin to turn positive, the stock market typically goes up in response.
Richard S. Lawrence, CFA / May 6, 2022SCHEDULE A CONSULTATION
We recommend only to invest in the stock market with a long-term view (3+ years) and have cash available for emergencies and spending needs for the short term (1-3 years).
PLAN FOR THE LONG TERM
PREPARE FOR SHORT TERM STOCK MARKET DECLINES!