***Disclaimer – I’m not a financial advisor, just a normal guy with financial success.  The information shared here is purely for educational purposes only***

But you know what?  It’s also an opportunity.  As painful as it is, this is the time to put more cash to work and wait for the turn around.  Some people define wisdom as doing something today that you will be happy with later, meaning you won’t regret doing what you are doing today.

No one knows the future, so it’s hard to see the bottom with the Stock Market jerking us around.  But there are some things we do know, and we have the courage to continue walking down that path with the information that we do have so we will be happy with the decision we make today.

Inflation is not completely under control

It’s no secret that Inflation is the name of the game in 2022.  The inflations hit everyone from food, to energy, to entertainment, housing, and just about everything we do.  It’s the highest inflation we have seen in 40 years, though still light years away from the late 70s and early 80s level, it’s as bad as most of born after the 80s have seen.

We know that the Federal Reserve’s job is to either foster growth or control inflation, so they have made it clear taming inflation is their #1 priority.  They have even told everyone to brace for some pain ahead.  The idea is shorter intense pain will hopefully help all of us avoid drawn out inflation and flatten growth in the economy overtime and speed up the recovery process.

So just remember that the inflation and the high interest rate is only temporary, there will come a time (though some predict not in the too distant future) that the Federal Reserve will starts to cut interest and the market will bounce in a big way.  

Inflation is Holding Back Growth

Most people want the stock market to do well (especially the wealthy), but the Federal Reserve knows that it’s something that has to be dealt with sooner rather than later.  So most investors applaud the Feds when they have the courage to keep raising interest and forcing the economy to slow down, job growth to slow down, and company profits to slow so prices can be more controlled.

Of course it’s no fun seeing some company contracting instead of expanding, slower hiring, less corporate profit, more red days in the stock market than you care to remember.  But again, remember that it’s temporary; these days will pass and don’t give up on your investment in these times.

It’s an Opportunity

Even in these dark days, there are opportunities.  Warren Buffett says to be greedy when everyone else is fearful and be fearful when everyone else is greedy.  We human beings tends to function just the opposite of that, so only a minority people profit off this correctly stated principle by Warren Buffett.  To be clear, this is the time when most are fearful.

I am not going to lie.  It churns my stomach to see my investment accounts down by five figures on days like this.  What helps me get through this is to just look at the historic S&P data.  S&P average over double digits since its inception; it has far more green years than red years, and the down years never last that long, meaning there are much more good times than rough times.

As painful as it gets, I always try to put more money in on red days that drops above at least 0.5% on average between the three indexes.  On days like, I double or triple my usual cash into my investment because I believe the future bounce back will be spectacular.

The Bounce Will Come

Now, I am not telling you this is the bottom, I would be a liar if I tell you I know where the bottom is.  But I do know a good deal when I see one.  Stock markets are good deals right now and it’s possible it could still get even cheaper to buy and thus allow you to reap more profits, but nobody knows how this thing will go.  

The general consensus among most financial experts is that this is a good time to buy and your chance of making a solid return is very good.  Could it go lower?  Like by a lot?  Of course, but you buy know and even if it goes down another 10-20%, you will eventually get all your losses back and then some.

What you DON’T want to do is to panic and sell or stop contributing to your investment when things are going sideways a little bit.  Truthfully, if you have lived through the COVID pandemic swings, this will seem tame compared to what all the investors went through in those days.  We saw market drop 1,000, 2,000, and almost 3,000 points on Dow Jones in the not too distant past.  What did the market do after the pandemic was somewhat under control?  It just promptly went up 40-50% depending on which index you were looking at.  Don’t be on the outside looking in when the bounce comes.

In Conclusion

DO NOT lose heart on days like this, especially if you are a long way from retirement.  Even if you are close to retirement, the chance of the market bounce back in a big way in the next 12-18 months is probably quite good, though no one knows for sure!

I am personally operating in such a way knowing that the good days will come when I look back and glad I continued to contribute to my investment and retirement account even when the sky seems to falling just a bit.

***Please feel free to reach out to us at [email protected] if you want some free advice on your finance***