The last time the stock market did worse in January to June, I was at a very high level. The year was 1970.
For me, that was a time of acne, polyester clothing, bad hair, trying to seduce girls, and Mrs. Lawrence’s English class. All the unpleasant experiences — like investing are for many people right now.
For a thousand years and generations X and Y, this is the first event and the rise in prices. The rise in prices has been followed by the Federal Reserve’s clear response to rising interest rates. Even our most developed market has not been able to deal with any of these problems.
The bond market has resold. Bond prices this year have dropped by 10% in the US
Since high interest rates reduce corporate profits, and since rising prices cause consumers to spend less money, the stock market has also become worse off. It is down 20% in the first six months of 2022 (as measured by the S&P 500 index).
The only comfort I can give? If you are like most readers of this section, you have not purchased the Bitcoin hook, line, and sinker. That cryptocurrency is down more than 60% this year!
Back to junior high. After that, acne, polyester, and oily hair disappeared. (The hair eventually left). My problems with other men and women were also reduced when I stopped looking at my shoes and started looking girls in the eyes.
As for Mrs. Lawrence’s English class, I hated it! It was hard, and most young men do not like hard things.
But today I will rise and call that blessed woman. By the time I finished my 7th and 8th English, I was a grammar master. I could draw a sentence, connect a verb, and see a sentence hanging 50 feet with my eyes closed.
Here’s my point: Investing right now is like being in Mrs. Lawrence’s class. It’s not fun. Living in a bear market is difficult. We just want it to end.
I remind you — in every age you are — that this was not the first time that the markets had fallen on bear territory.
I do not have a crystal ball, and my ability to predict is not very important. But I can read history.
According to the Wall Street Journal, we have had a dozen bear markets since 1950. In all cases (except the current situation), the market has recovered its losses and moved to a new location. The only question is… How long does it take?
Here is what history shows: In nine of the twelve bear markets, ordinary investors found what they had lost in a year or so. Not only that, but the median return after one year was over 20%.
I have written in this area that markets are the only way to “cut” the economy. Weak and / or weed organizations are “pulled away.” They couldn’t. And even health organizations are “reduced.” This is how the strong become strong and bear fruit. It is a painful, but important process.
To be like a junior high.
It all takes time and patience.
So here is endurance, and it is a sure hope for the future.
To help you think about such issues, I have compiled a list of retirement questions for people over the age of 60. It is free if you would like a copy. Email me at bmoore@argentadvisors.com, and I will email you right away.
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