Unfortunately, I inherited some of my Dad’s humor. What this means is that we only have a few jokes/stories and we use them often.
One of my Dad’s stories he told with regularity starts with “Well, when I was a kid…”. The story goes on to explain how he walked uphill BOTH ways to school and it was so cold outside that him Mom gave him warm potatoes to put in his pockets to stay warm. He would tell us this story on cold mornings when we did not want to get out of our warm bed to go to school.
While the story was embellished over the years, Dad was attempting to provide some perspective. Perspective that I did not have to walk to school and perspective that I was able to sleep in a warm house.
Perspective Matters
The first three quarters (9 months) of 2022 have been a punch in the gut for both stock and bond investors. Our most frequent question from our client family goes something like this… “What do the next 3, 6, and 12 months hold for investment returns?” While we obviously do not know the answer to this question with certainty, we can look back at history for some help.
Below is a look at the S&P 500 stock market returns for every year when the first 9 months of the year resulted in a 20%+ decline
Outside of 2008, the last 3 months of these years ended on a positive note… even when the first 9 months had substantial negative returns.
Are we heading towards another 2008 financial crisis or a more “normal” period like the other four periods in the chart above? Given strong corporate balance sheets, the lack of a housing crisis, and a healthy consumer, we are not expecting a repeat of 2008. If/when a recession comes, we think it will be a mild one when compared to a 2008 or a 2020.
As we have said many times… history never repeats itself but it often rhymes.
About the Author
Matt Price serves as a Partner and Director for The Price Group of Steward Partners. He resides in Houston with his wife, Emily, their three children and "Fisher" the family golden retriever. Matt studied at the University of Pennsylvania – Wharton School of Business for his Certified Investment Management Analyst (CIMA®) designation after receiving his undergraduate degree from the University of Tennessee - Knoxville. Over the past 11 years, Matt has helped families make high quality, common sense decisions regarding their wealth and their legacy. Matt firmly believes everyone needs a wealth coach!
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The views expressed herein are those of the author and do not necessarily reflect the views of Steward Partners or its affiliates. All opinions are subject to change without notice. Neither the information provided nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Past performance is no guarantee of future results.
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