The theme this week on the Retirement Quick Tips Podcast is mid-year commentary & outlook. 

Today, I’m talking about the stock market. As I record today’s episode, the S&P 500 is down roughly 20% so far this year, and the top 3 headlines on CNN’s Markets page today read: 

• Consumers are feeling less confident about the US economy as prices keep rising
• Home prices are still going strong, but momentum is slowing
• Analysts accuse Bed Bath & Beyond of turning off AC in stores to save money as sales plummet

Sheesh, talk about doom and gloom!  This has been a very difficult year for the vast majority of investors, and there haven’t been many places to hide. The average U.S. stock is down 30% this year. The bond market in aggregate is down more than 11% this year, and cash holdings are losing value in real terms due to the erosion of high inflation.

Investors right now are oscillating between fear and panic, which means that we still have a ways to go before the current bear market bottoms out. Volatility will likely remain high and further losses are probable. 

Even though the stock market is unpredictable, it actually follows a very predictable emotional pattern. As I said, I think most investors are still in the fear and panic stage, which means we are not yet at the worst of this downturn. 

Understanding market emotions is helpful, since it’s inevitable that we must go through a bottoming process that is characterized by capitulation, despondence, and depression – and unfortunately, I don’t think we’re there yet. 

Every significant downturn in stocks follows this same predictable pattern - every time. It may take just days to pass through the fear and panic stage, but other times like in 2008, it can take months. 

How long before the market bottoms out? That’s anyone’s guess and it depends on where the economy goes from here, which I’ll talk more about in a couple days when I discuss the economic update.

Since World War II, bear markets last an average of 13 months from peak to trough and it took a total of 27 months to get back to breakeven. During that 13 month average drop, the S&P 500 index dropped an average of 33%. We are already nearly 6 months into the current bear market and have experienced about 2/3 of the typical decline already, so my message for you is to keep the long-term view in mind, and have patience while this bear market continues to go through a bottoming process. 

As I talked about yesterday, the price of investing is volatility, and dealing with a couple years of turmoil every 7-10 years in order to profit from those periods of growth and expansion, whose gains far outweigh the temporary losses we’re experiencing now. 

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the Retirement Quick Tips podcast. 

----------

>>> Subscribe on Apple Podcasts: https://apple.co/2DI2LSP

>>> Subscribe on Amazon Alexa: https://amzn.to/2xRKrCs

>>> Visit the podcast page: https://truenorthra.com/podcast/ 

----------

Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance