Mid Year Update

“In many ways the current economic cycle is unique. Typically, as the economy and stocks begin to retreat, there is a flight to safety and traditional fixed income (bonds) perform well. Interest rates rising just as the economy is slowing has produced historically poor performance in fixed income. This year has given us the worst year-to-date performance for balanced portfolios in nearly 60 years (as measured by portfolios with a 60/40 allocation to equities and bonds).

When times are tough it is easy to forget the cyclical nature of the economy. All cycles have ups and downs, and this cycle is no different. About the only two things down cycles have in common is the feeling that they are exceptionally awful, and the irrational fear the tough times will last forever. However, history teaches us that setbacks are relatively short when compared to periods of expansion and prosperity. Imbalances are eventually corrected, economic growth kicks-in, and new bull markets follow bear markets.

Still, the current market environment is about as challenging as any I can recall in the past 40 years. A global pandemic, war in Europe, emboldened geopolitical adversaries, potential food and energy shortages, unprecedented monetary policy decisions, political divisiveness, and runaway inflation give all investors plenty to worry about. The question on everyone’s mind is what happens next.”

Investment Advice offered through Clearwater Capital Partners a Registered Investment Advisor