No one, no matter how much research they do, can give accurate market predictions 100% of the time, but here are my thoughts. The S&P500 is already down 21.1% year-to-date (as of 6/21/22), so hopefully the worst hits have already happened. However, I do anticipate we’re going to continue to see volatility over the summer. I think the Federal Reserve is going to continue to raise interest rates to combat inflation. Most bonds are now priced with increased rate expectations, according to Brian Smedley, Guggenheim's Chief Economist/Head of Macroeconomics and Investment Research. So hopefully the bond market will start to even out. With interest rate increases, expect to also see mortgage rate increases. I think the stock will start to calm down in the fall/end of the year. I don’t anticipate any big returns for the year, unlike after the 2020 crash; we're more likely to see a slower upward transition when the market does recover. We are currently in a bear market and a recession is still a very real possibility, even if the volatility decreases by the end of the year. The average bear market lasts 1.3 years and takes 22 months to recover.
The best advice I can give is to hang in there and wait for the recovery (if you can). Then once your investments have recovered, that will be the time to withdrawal funds/lower risk if so desired.
Staying invested when the market is down is key to successful investing. Here’s what happens when you miss the best market days (in the last 20 years), which tend to be next to the worst days:
Feel free to reach out to our advisors if you have additional questions. As always, we are here to help!
Resources:
Guggenheim Investments 2022 Mid-Year Macro Outlook
AMG 'Keep Calm and Remain Diversified'
https://www.cnbc.com/2018/12/24/whats-a-bear-market-and-how-long-do-they-usually-last-.html