“The stock market is a device to transfer money from the impatient to the patient.” – Warren Buffett
Bear markets feel like they drag on and on which we know is very difficult to watch as investors. Both stock and bond markets have seen three consecutive quarters of negative returns. Add to that, the war in Ukraine along with the continued tension between China and Taiwan have sustained fear of a possible larger geopolitical conflict.
With 10 months of 2022 in the rearview mirror and only two months left, we ask the question - how much longer can this market downturn be expected to last? Looking back at nearly 100 years of history, the average bear market has lasted approximately 15 months. It could be at least the middle of 2023 before we see renewed market stability. Again, as investors, it’s essential we remain patient.
In the middle of this volatile market, gas prices have fallen from their summer highs. Inflation pressures stemming from supply chain disruptions are easing significantly. The Federal Reserve (Fed) has taken inflation seriously and is doing its job to contain it by raising short-term interest rates. One of the opportunities we haven’t seen in several years is relatively higher rates on Certificate of Deposits (CDs) that we offer in your investment account. They are FDIC insured CDs from banks across the country with 6-month rates currently around 4% and 12-month rates around 4.25%.
We believe your portfolio is comprised of high-quality investments and history continually shows us that well positioned, patient investors are rewarded over long periods of time. If you have any questions, please reach out. Thank you for your continued business and confidence.