Banknotes Blog

For much of the last six months or so, the inflation data has remained high, the Fed raises rates, the markets react thinking the Fed is going to slow or reduce the size of their rate hikes only to have those hopes dashed. Rinse and repeat. The whole thing is getting old for everyone.

July was awesome, August was a reality check, and September was a horror story. At times, this year it has felt like we have been on a thrill ride at an amusement park – and I am not talking about the Dumbo ride at Disney World.

Moreso than others in recent memory (with the notable exception of 2020), this year has been hard to figure out – all the twists, turns, ups, and downs have left many investors yearning for direction. Borrowing an analogy from the world of entertainment, it’s been more Animal House (i.e., chaotic, shambolic) than Animal Planet (i.e., relaxed, broadly appealing). Let’s enter the zoo and attempt to make sense of the market monkeyshines…

People are concerned that everything that could go wrong with the economy is going wrong right now. But the truth is that our economy tends to balance out. When one aspect is less than ideal – let’s say inflation – another aspect is thriving. For example, during times of high inflation, jobs tend to be strong, resulting in low unemployment. The trick is to find the parts of the economy that are doing well and figure out how your small business can fit into that trend.

One of the only things hotter than this Wisconsin summer and recent inflation data is the debate surrounding whether the economy has officially entered a recession. Some economists say, and have been saying for some time, that it has; others, including those at the White House, beg to differ. So, who’s correct? The short answer is, it’s complicated, and in this article, we’ll explore why.

In the beloved children’s folk tale, Chicken Little famously tells anyone who’ll listen that the sky is falling. You'll hear a similar refrain about the economy from the talking heads on any given market-focused cable program. There are reasons for their prognostications, but are things really as bad as they're made out to be? Cover your head, if you must, but read on.

Most consumers are all too familiar with the term inflation. But stagflation is a rare economic condition that few are familiar with and even fewer have had to experience. While the country is not dealing with stagflation at the moment, it is a term that is starting to be used occasionally in the media that deserves a more in-depth explanation, and warrants some information about steps both businesses and individuals can take to reduce the chances of stagflation occurring in 2022.

In the simplest terms possible, investing is a journey from point A to point B. Thinking about that journey as a road trip, most would prefer the ride to be as smooth as possible. However, bumps, traffic, and even a detour or two are inevitable, and that's often the case when investing, too. As 2022 progresses, we continue to see the markets being quite volatile and bumpy, and this is likely to persist. Let's review what happened in May.

You’ve probably heard the old investing adage, “Sell in May and go away.” It’s an expression based on the theory that the stock market underperforms during the warmer summer months, before coming back six months later with stronger growth. By its logic, one would sell their investments in May and not invest again until sometime around the beginning of November. With the market activity we’ve seen so far in 2022 – and specifically, into the last couple of weeks of April – it’s fair to wonder whether the selling came early this year.

There are plenty of economic reasons to not want to revisit the Seventies. Unfortunately, we're dealing with many of the same issues now that we were then, plus Covid. There's good news to be found, though. Here's why it's unlikely we're going to see a full repeat of history.

We’ve lived for 20+ years – at least – since inflation was a problem. (The reality may be closer to 40 years.) Here’s a quick review of what inflation is, how it affects normal people, and how to adjust your finances accordingly.

In the financial world as everywhere, change is inevitable. It happens both in the blink of an eye and slowly, over time, for reasons obvious and subtle. Recently, investors have seen change spurred on by government policies, corporate profits, economic factors, and geopolitical events. Echoing the title of the Bob Dylan classic, the times they are a-changin’.

Given how strongly equity markets have recovered since the 2008–2009 financial crisis, one might easily forget that volatility (i.e., risk) and losses are a normal part of investing life. To help understand why, let’s take a closer at how domestic large company stocks, as defined by the Ibbotson Large Company Stock Index, performed over the longer term, from 1926 through 2021.

Is the market on its way to bear territory? Is this just an interlude in a longer growth cycle? Or are the averages just catching up to us? Only time will tell, of course. Let’s take a look at the month that was before turning our gaze to the horizon.

We made it – 2021 is now behind us, and 2022 has arrived! While last year certainly had its challenges (inflation, Covid variants, supply-chain issues), the markets took it all in stride and performed reasonably well ... at least, if you take a 30,000-foot view. This year promises more obstacles, as inflation continues to surge, the Fed shifts from easing to tightening, and Covid concerns remain as prevalent as ever. Hopefully, by planning for the unexpected this year, investors can come out ahead. Let’s assess where we've come from, and contemplate where we may be headed.

Volatility seems to be back, as is a rising sense of uncertainty over what the future holds. “It’s like déjà vu all over again,” as Yogi Berra said. Let’s dive in and try to make some sense of what we’ve been seeing.

Inflation is on the rise, the economy slowed dramatically in the third quarter, and yet, the markets staged a strong rally in October. Like the song says, “We got to beware,” and “Everybody [needs to] look [at] what’s going down,” if we want to be able to navigate through the uncertainty.

Interest rates may go up, prices may come back down. We simply cannot predict the future with any certainty. The best strategy is to just do what is best for your current business operations.

As things continue to play out in ways both expected and unexpected in the markets and economy, we can’t really say that this is just what we thought would happen.

Normally, when a flight encounters turbulence, something outside of the airplane is the cause. That’s not the case with this Delta flight, however – the widespread variant of COVID-19 is causing strife in our society (mask mandates; less activity, like going out to eat; etc.) and could result in sustained disruption to our economy going forward.