Stocks Rise First

I’m not a fan of synchronized swimming. If my wife makes me watch it, I only look for the mess-ups. I prefer seeing the girl get kicked in the face more than the perfect routine. The stock market and the economy wouldn’t be very good synchronized swimmers.

The stocks tend to bottom out and start getting better long before the economy does. I have recently studied every major recession since 1953 and saw one continual theme. The market gets better long before the economy. It might have already bottomed out in this bear market and begun its rise. Only time will tell.

I read an enormous amount of research every week and I’m seeing a lot of doom and gloom about stock valuations, earnings, inflation, and of course, the Federal Reserve. I see the words “downturn,” “deteriorating,” and “drop” pretty frequently in my reading. (By the way, doom and gloom sells more papers than truth, but that’s a story for another day.)

I think we will see more, not less, negative news as the Fed’s interest rate increases continue to work their way through our economy because of their delayed effect. The stock market and the economy aren’t always in sync.

This is why we will probably see headlines saying something like “Stocks Surge while the Economy Continues to Sink.” This happens because the stock market is forward-looking and often hits bottom and starts to climb while the earnings, unemployment, GDP, and payroll data continue to decline.

The market looks ahead and often takes into account negativity. So whatever you are afraid of today, know that the market has already considered it, adjusted for it, and looked past it. Your gut tells you to run, but don’t overreact to current headlines because today is already priced in.

Just because the economy may sink into recession doesn’t mean the market hasn’t already dealt with it. So have a good investment plan and stick to it.

I don’t watch Saturday Night Live anymore because it’s not funny anymore, or maybe I’m just getting old. But in 1984, SNL did a Synchronized Swimming skit with Martin Short and Harry Shearer. Martin Short’s character wore a big orange lifevest because he couldn’t swim. It is hilarious because they were so bad at synchronized swimming, and they were anything but synchronized.

I think it will be a good thing over the next few months when stocks and the economy are out of sync. Hopefully, the market has already bottomed out and will continue to go up.

Have a blessed week!

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The economic forecast outlined in this material may not develop as predicted & there can be no guarantee that strategies promoted will be successful.

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