Page 71 - August 2022

FINANCIAL PLANNING
“Essentially what I’m saying here is that we are in the lowest trough in history and that the best returns come after the troughs in consumer sentiment.”
recorded in U.S. history. Now, we can look at the returns through eight peaks and troughs of consumer sentiment. Everyone wants to get in the market and buy when the market is going up because it feels much safer. The average return 12 months after a peak in consumer confidence is 4.1%. That’s not a terrible return but it certainly doesn’t look all that attractive. On the contrary, the average return 12 months after the troughs is 24.9%. Essentially what I’m saying here is that we are in the lowest trough in history and that the best returns come after the troughs in consumer sentiment.
It’s a scary thing to invest your hard- earned money during a time of volatility and
uncertainty, especially when you don’t have much confidence in the economic outlook, foreign stability, or the political divide in our
piled on debt that they couldn’t afford. The market has been pricing in a recession for
the majority of 2022. That’s the good news. Recessions happen every few years. We actually had one in 2020 but everyone seems to forget about that because it was so short-lived. This recession might drag out a little longer and we may see inflation higher than normal for a couple of years.
Eventually, we will get through this. Importantly, the equity markets typically hit their bottoms and are in recovery mode long before
the data reflects that the smoke has cleared. Most investors who react emotionally will miss out on the vast majority of the upswing.
country. However, if you want to be investor, it’s absolutely instrumental your comfort zone when the market opportunity like we are in presently.
RECESSION FEARS
No matter what news channel you
your television, you will hear talks of
At this point, I would expect a recession. This doesn’t mean a 2008-2009 recession. I think that was more of a once-in-a-life-time recession. Investors were over-leveraged and many people
a successful to get out of creates an
put on
a recession.
SPEEDHORSE August 2022 69