The world has changed. Although crossing the midyear milestone may elicit a symbolic sign of relief, turning a calendar page does not alter the reality. This is a pivotal time of geopolitical issues, high inflation, volatile markets, and the end of a 40-year period of declining interest rates. Tuning out the “noise” and keeping the investing fundamentals front and center is a challenging concept to adhere to, when it seems the noise grows louder, the markets double down on volatility, and the economy seems to look less favorable. Although the headwinds of the first half of 2022 are still present, as we enter the second half of the year, not all is bleak. Optimism remains for several reasons. First, there are still some areas of the economy that are in the recovery phase following the pandemic, which allows for some level of continued growth. Secondly, there will likely be a return to the fundamentals for the equity markets. Going forward, the market will likely be largely driven by corporate earnings rather than multiples expansion, which is more so tied to sentiment and can change on a whim. Thirdly, although there are mixed expectations among various resources, a healthy recession is likely to be experienced within the next year or two. A moderate recession will help to clean out the excesses of the past decade. It wouldn’t be realistic to have a sustained period of growth without an occasional downturn to balance things out.
For investors, the 2022 outlook is not necessarily a call to action. Maintaining a portfolio that is actively managed and balanced to align with long-term goals will help the transition from pain to gain over time. Therefore, although market volatility has returned, that is no reason to be discouraged. Investment managers remain confident in making decisions based upon fundamental research, which has proven its success over time throughout expanding and contracting markets. Although challenging, it’s normal. It’s expected. It’s healthy.
As we continue through the last half of 2022, we will continue to pass along insights that may be helpful to you. However, we welcome questions, concerns, or feedback from you as we continue to be a guide, helping you to plant the seeds that you wish to Harvest.
Harvest Wealth Group, LLC is a financial services firm located in Middle Tennessee, serving clients in Tennessee and across the country. If you are seeking a Financial Advisor to help plan for your future or provide insight during periods of market volatility, feel free to reach out to us.