A Bloodbath in the Markets

To state that the stock market got off to a bumpy start for 2022 would be like saying Hurricane Katrina caused some minor damage…it’s a gross understatement.

Unexpected, though? Not really.

With the Fed backing away from the easy money era and the prospect of multiple rate hikes just around the corner, a slaughter in the technology space was almost guaranteed.

Unfortunately for me, I changed jobs in 2021 and had rollover money that needed investing. So, I invested it…at the end of last summer. Many of those investments look, well, not very rosy. Fortunately, I take a very long-term approach to investing. I buy a mix of stocks, ETFs, and fixed income (very small percentage due to my distance to retirement). When I select individual names, I choose mostly well-known, strong businesses and only speculate in areas that I understand.

What does 2022 have in store?

Good question. If I had to guess, it will likely be a bumpy ride. That seems to be the broader consensus. Economic and business momentum aside, runups in 2020 and 2021 equities developed almost a “too good to be true” situation.

From an economic perspective, I am particularly curious about the inflation picture. Will supply constraints ease, allowing businesses to meet robust demand? Raising interest rates doesn’t correct a supply chain crisis. The Fed knows this because they would have raised rates by now if they didn’t.

How about unemployment in the service sector? The government still can’t quite figure out why folks aren’t returning to work.

Housing – ohhhh, housing. As a prospective buyer in my home state of Florida this year, I am convinced that prices will remain elevated, albeit with a lesser rate of increase – perhaps even a leveling out. How about in other less popular destinations? Will higher mortgage rates quell interest for homes? And how might this effect other areas of the economy?

Viewing everything in the aggregate, and observing how one factor might influence another, is what makes economic forecasting so difficult.

I say this as someone who is not an economist…best of luck to them.

*I am not a financial advisor and none of this constitutes investing advice.

Delayed Gratification

Scrolling through social media offers endless opportunity to feel the need to make impulse purchases on items you think you need, in order to keep up with people you don’t know.

That’s kind of crazy, isn’t it?

Yet, we still fall prey to impromptu, expensive purchases. Doing so frequently can spell disaster…

It’s natural to want nice things, but nice things require money, and money is acquired through a significant contribution of your time and effort.

The real question becomes, is what you are purchasing bringing value to your life? If the answer is yes, and you can truly afford it, it may be worth it. If the answer is yes, but you know that in order to complete the purchase you will likely need to take on a big loan, use a payment plan, or wipe out your savings…perhaps the purchase can wait?

The ability to delay gratification is a powerful display of maturity.

Delayed gratification is not a new concept. It has been cited by numerous personal development and financial leaders as a way of growing more content, and of accumulating wealth rather than diminishing it. It demonstrates that someone has the capacity to put off in the short-term, in order to gain in the long-term.

Who knows, after saving up that hard-earned money you may find that the item that once seemed like a must-have, is no longer critical to happiness.

No matter the decision, one result is certain. The item will bring you stress if you compromise yourself financially in order to get it.  

Where’s the joy in that?