KF Update – Markets, Inflation, & Business Updates
5 Minute Read
Good morning, I hope this email finds you well and you had a nice weekend. I wanted to send along some of my continued thoughts around the markets, inflation, and some business updates within our practice.
The Markets – What exactly is going on?
Most major US indexes (Russell, Dow, S&P 500, Nasdaq) are either in bear market territory or approaching it. A bear market is a 20% or more drop from its high. Since 1980 we have had 9 bear markets with an average decline of 28%, and an average length of 236 days. Since 1980 we have had 10 bull markets (upward market trend) with an average return of 99%, and average length of 852 days. Please see the below graphic from Vanguard:
As stressful as these downturns can be, it’s important that we continue to keep that long-term perspective, understanding we are going to need to be patient and ride out these downturns to ultimately reach our investing goals for years to come.
The importance of staying invested through all markets, up, down and sideways cannot be understated. Here is another excellent graphic showing the effect of missing just a handful of the best days in the market:
Inflation
Inflation remains persistent but the latest year over year numbers did come down a bit, here is a summary of increases in the Consumer Price Index (CPI) over the past year:
May 2020 – May 2021 – 4.99%
June 2020 – June 2021 – 5.39%
July 2020 – July 2021 – 5.37%
August 2020 – August 2021 – 5.25%
September 2020 – September 2021 – 5.39%
October 2020 – October 2021 – 6.22%
November 2020 – November 2021 – 6.81%
December 2020 – December 2021 – 7.04%
January 2021 – January 2022 – 7.48%
February 2021 – February 2022 – 7.87%
March 2021 – March 2022 – 8.5%
April 2021 – April 2022 – 8.3%
Source: US Bureau of Labor Statistics
We are closely watching these numbers, if the 8.5% turns out to be ‘Peak Inflation’ and we see a steady decline in the year over year numbers, we could see some stability in the markets and more clarity from the Fed on their monetary polices going forward. If inflation jumps up past 8.5%, we could see additional volatility in markets.
Business Updates
We are really excited to announce we have started a summer internship program for 2022. The way I was able to get my foot in the door in this industry was through an internship program in 2005, and I don’t know how else I would have gotten that chance.
After several very impressive resumes and interviews, we hired Abigail Allen, a Finance major from SUNY Brockport. Abigail grew up in West Winfield and will be entering her Senior year in the Fall, which will be spent studying abroad in Ireland! We are really excited to have Abby on our team for the summer.
Final Thoughts
Again, we can empathize with all clients how stressful these downturns can be as we never like to see our accounts go down. While it’s painful to go through, these downturns can set up our markets and economy for great things longer term. Inflation is forcing us away from easy monetary policy, 0% interest rates, and the Fed stepping in at any market weakness and that is a good thing for markets long-term.
We hope you find this information helpful, and again, please do not hesitate to contact the office with any questions.
Best,
Clint, Renee, and Abby