Broker Check

Monday Money Report

| June 06, 2022

Last week was another roller coaster, with the market up and down day by day. We ended the week close to where we started. We expect this volatility to continue while the Fed tries to slow down the economy, creating that unicorn known as a “soft landing”. To do that, it is expected that interest rates will rise another half of a percentage point this month and next.

Times like this emphasize the importance of sound financial planning. Pay down debt, build your emergency fund, and sick to your investment allocation.  And, while it seems impossible with the state of your 401(k), try to keep calm. Even if we don’t get that soft landing, where inflation returns to normal and the economy keeps chugging along, and have a recession, it generally takes about ten months for unemployment to return to pre-recession levels.[1] Compare that to the ’08-09 financial crisis, where it took 32 months for unemployment to recover.

Here's some other reassuring data. We’ve had 14 bull, or rising, markets since 1932.  These have returned 175% on average.  The 14 bear, or down, markets since 1929 have resulted in an average loss of 39%.[2] Bear markets also tend to be shorter than bull markets.

Why do these downturns leave such a lasting impact? Behavioral finance points to loss aversion, a bias that investors feel losses more, and remember then longer, than corresponding gains. If you were happy with your accounts in 2020, you should still be happy – the S&P is up by 41.87% over the last two years.[3]

We’re going to be on this roller coaster for at least a few more months.  Keeping things in perspective can help you sit back and ignore that your stomach seems to be floating somewhere above your head.

Your action item this week is to develop a plan to pay down your credit cards. As interest rates continue to rise, it becomes harder and harder to pay down debt. Tackling the card with the highest interest rate first will be the fastest and least expensive method. Working on the smallest debt first can give you continued successes that keep you motivated.  Either way, getting debt under control is an important part of financial health.

You’ll find more information on our Facebook page, and our website at covingtonalsina.com.

Investment advice offered through Great Valley Advisor Group, a Registered Investment Advisor.

All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. 

The opinions voiced in this show are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investment(s) may be appropriate for you, contact the appropriate qualified professional prior to making a decision.


[1] “There are 2 very different kinds of recessions”, Will Daniel, Fortune Magazine May 28, 2022

[2] “Markets are down but these charts explain why investors shouldn’t panic”, Nicole Goodkind, CNN Business, May 23, 2022

[3] https://ycharts.com/indicators/sp_500_2_year_return#:~:text=S%26P%20500%202%20Year%20Return%20is%20at%2041.87%25%2C%20compared%20to,long%20term%20average%20of%2014.56%25.