Bonds have had a bad year…but typically returns improve after a period like this:
Source: Blackrock Student of the Market May 2022
The stock market is rough right now…but history shows it usually gets better:
Source: Blackrock Student of the Market May 2022
For money that we need to use in less than 1 year, the rule of thumb is to keep in cash. This is because we can’t afford to put the money at risk. Beyond 1 year, it is important to consider the money lost to inflation. This chart shows the income needed to outpace inflation vs. current cash yields:
Source: JP Morgan Asset Management GTM May 18, 2022
The stock market is starting to get back to fair value. Consider the chart below showing the forward P/E ratio for the S&P 500 at 16.5 compared to a high of 22.7 last year. This is the price divided by estimated earnings for the next 12 months.
Source: JP Morgan Asset Management GTM May 18, 2022
Charts are helpful for us to understand the details of what is going on right now. Keep in mind that past performance does not guarantee future results.
Centered Financial, LLC is a registered investment adviser offering advisory services in the State of California, Utah, Texas and in other jurisdictions where exempted. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. There is no assurance that the techniques, strategies, or investments discussed are suitable for all investors or will yield positive outcomes. To determine which strategies or investment(s) may be appropriate for you, consult your financial adviser prior to investing. Any discussion of strategies related to tax or legal planning is general and is not intended as tax or legal advice. Please consult appropriate tax and legal professionals for recommendations pertaining to your specific situation.
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