The Lowry Letter®

We think David Kelly has some wise words about the state of the economy and financial markets. We especially like this part:

“While media reports will continue their frenzied jump from one economic crisis to another, it is important that investors understand that most of these problems look set to fade, setting the stage for better economic performance and financial markets in the months and years ahead.”

First, a reminder that our office will be closed on Monday, July 4, in observance of the Independence Day holiday. We hope you have a safe and enjoyable long weekend!

This is the last Lowry Letter® of the first half of 2022, and what a half it has been. Stock and bond markets have found some stability (at least as of the writing of this letter).

Recession concerns weigh on many investors’ minds, but in many ways the economy is doing okay. This may sound crazy, given market declines this year, but it is a good time to remember that the economy and the markets are not the same. 

The market downturn entered a new phase this week. Fears of an inflation/Fed-led recession are increasing, leading to broad selling and an official bear market. There are some important success skills to maintain during times like this. See the Lowry Letter® for more!

It feels like 2022 just started, yet we are almost halfway through the year.

Our monthly market recap is available here. The Cliffs Notes version is that May was not great for the markets generally, with some silver linings showing in the bond market.

Last week saw some relief from the declines that characterized a very rough May for the markets. Here is our periodic reminder that, for long-term investors, maintaining your current allocation is often the correct approach. Changes to your personal circumstances are an exception to this guideline.

This is why periodic meetings are helpful. Sometimes there are issues that we don’t become aware of until we have those discussions. Of course, we are always happy to talk in-between those scheduled intervals, so don’t hesitate to reach out!

This week’s letter is a short one, owing to some business travel for The Joes®. We are seeing encouraging signs of stability in the bond market and will discuss more of that next week.

Do you have any questions you would like us to address? Please send them in and we will cover them.

Investment declines remind us that there are many things that we don’t control about the economy and the markets.

What can we do during challenging times?

• Continue regular investment into appropriately diversified portfolios.
• Revisit savings levels to make sure you are taking advantage of reduced asset prices.
• Remember that long-term goals require patience during the rough patches.

Brad McMillan has a helpful post on the subject here. Now to our regularly scheduled programming

We’re going to pause our normal format and speak about recent market volatility. An important concept is “risk premium.” Formally, it is a measure of excess return that is required by an individual to compensate being subjected to an increased level of risk. In simpler terms, it is what you expect to be paid for taking on investment risk.

Our webinar from last week is available at our YouTube channel. We cover a number of topics and fortunately, the information is still pretty current!