Perspective Amid A Moment Seeming Fraught With Investment Risk

Published Friday, March 18, 2022 at: 7:48 PM EDT

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Russia is challenging world order, inflation is at a 40-year high, and a stock market correction has been underway. The relentless progress of the United States is being tested once again. Here’s an important perspective on this moment in financial history. 

On March 23, 2020, the stock market bottomed. The Covid bear market had erased -33.9% of the value of the Standard & Poor’s 500. 

In that moment, which preceded the advent of vaccines, no one knew the bear market was over. No one knew the stock market would appreciate by 71% in the next 21 months. In the throes of the Covid crisis, no one expected the U.S. government would embark on the largest transfer payments programs since The New Deal.

In that fraught time, no one predicted that the American consumer’s balance sheet, two years hence, would be stronger than ever in modern American history. Nor did anyone foresee that the Covid-19 would be managed much the flu.   

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The Standard & Poor’s 500 stock index closed Friday at 4,463.12, up +1.17% for the day, and a breathtaking +5.97% from last week. The index gained +66.43% in value from the March 23, 2020, bear market low, as of Friday, March 18’s close.

Compared to the January 3, all-time closing high, stocks dropped by as much as -12.5% on March 8 before rebounding sharply.

The U.S. Index of Leading Economic Indicators (LEI), released this morning, provided fresh evidence that 2022 economic growth will exceed the 2.2% 10-year growth rate expected by the nonpartisan Congressional Budget Office. By a substantial amount.  The Conference Board, which collects the data for the 10-subcomponents of the LEI lowered its forecast for U.S. economic growth in 2022 to 3% from 3.5%.  The Ukraine situation prompted Ed Yardeni and J.P Morgan to lower their forecasts for U.S. gross domestic product growth.     

Point is, every moment seems fraught with risk. Seeing beyond a seemingly bleak moment is hard most of the time. Who knew two years ago we’d be trying to slow economic growth to tame inflation while a Russian despot faced an existential economic war?  

 


Nothing contained herein is to be considered a solicitation, research material, an investment recommendation, or advice of any kind, and it is subject to change without notice. Any investments or strategies referenced herein do not take into account the investment objectives, financial situation or particular needs of any specific person. Product suitability must be independently determined for each individual investor. Tax advice always depends on your particular personal situation and preferences. You should consult the appropriate financial professional regarding your specific circumstances. The material represents an assessment of financial, economic and tax law at a specific point in time and is not intended to be a forecast of future events or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete, and is not intended to be used as a primary basis for investment decisions. This article was written by a professional financial journalist for Advisor Products and is not intended as legal or investment advice.

This article was written by a veteran financial journalist based on data compiled and analyzed by independent economist, Fritz Meyer. While these are sources we believe to be reliable, the information is not intended to be used as financial advice without consulting a professional about your personal situation.

Indices are unmanaged and not available for direct investment. Investments with higher return potential carry greater risk for loss. Past performance is not an indicator of your future results.

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