CFS Viewpoint – July 18, 2022 

Frequently we look in the mirror and have to come to grips with the fact that being an investor means tolerating a volatile market and the inevitable downturns. We only mention the downturns as being tolerated as upturns and the associated gains are not anxiety producing and rarely a subject of the media. These downturns, which are not easy, require us to reaffirm our personal financial plans.

Since 1947, the U.S. economy has endured 12 recessions and seen 12 bear markets defined as a 20% or more decline on the S&P 500. There have been 4 recessions that didn’t involve a bear market and 4 bear markets that didn’t involve a recession. This shows that the market drops and recessions are not always connected. The stock market is forward looking. In 7 of 8 recessionary bear markets, the stock market hit bottom and turned upwards before the economy did.

In the first seven months of the year there are indicators that suggest a more positive outlook. Manufacturing production is up at a 6.6% annually, nonfarm payrolls are up at an average monthly pace of 488,000, and the unemployment rate has dropped to 3.6% from 3.9%. In April, both “real” (inflation-adjusted) consumer spending and real personal income were at record highs. Whether or not we are in a recession or one is inevitable is both premature and perhaps irrelevant. Our focus is on you and your investments regardless of what designations are applied to the economy and the markets.

We realize there are some economic headwinds. Not the least of which is the consumer, who was once flush with money but has been weakened by the current inflationary environment. The cost of almost everything has gone up in general and in particular the cost of gas and energy has been a challenge for every consumer.

When you try to distill many of the items previously mentioned, along with the war in Ukraine, supply chain issues, past and future moves by the federal reserve; to name just a few factors, it becomes clear that timing the market is impossible. Up to this point history has shown us that recoveries happen faster than people predict. Since 1946, the average recession has lasted for 10 months while the average growth phase has lasted for over 5 years. Anecdotally we like to say that the markets take 3 steps forward and 1 to 2 steps back and have done so over many years. Seven months ago those three steps forward resulted in all-time highs across the markets. Taking that fact one step further, it can accurately be stated that prior to those all-time highs there was not a bad day in history to enter the market.

We do not make these points to diminish or discount anyone’s understandable discomfort or uneasiness associated with these tough times. We get it and feel the same things. The reality is that a market that goes up all the time would not be a market at all. We have to endure these times and allow individual dynamic plans and strategies that are in place to work in order to reach our collective goals. As always, we are available at any time to answer any questions or concerns you may have. Please do not hesitate to contact us at any time. Our office number is 860-623-0104. Thank you for taking the time to read this and thank you for your business.

These are the opinions of Brian Cassidy, Arnold Magid and Dan Kelly and not necessarily those of Cambridge, are for informational purposes only, and should not be construed or acted upon as individualized investment advice. Past performance is no guarantee of future results.

Securities offered through Registered Representatives of Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Advisory services offered through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Cassidy Financial Services, LLC. and Cambridge are not affiliated.