So we’re coming to you again third Friday in a row. We had another really volatile week in the markets, and we wanted to share our thoughts about what’s going on with you.
The economy is still very, very strong. Here’s a slide that shows the gross domestic product for the past 20 years. And you can see the long-term trend is up higher and higher and higher.
There are troughs in there, like in 2005, the economy contracted a little bit. That was during the great recession – the housing crisis. And then there was a one-off to the right when Covid first came out. But you see how fast it bounces back.
The economy is very resilient, and it will bounce back.
This graph shows corporate profits going back to 1988, and you can see the trend again is up, up, and away. With some occasional dips. And the dips that you see there when the stock markets don’t do well. They don’t like that. They kind of get myopic; all they can think about is what’s happening today. But you see that the profits go higher. And when profits go higher, ultimately, they drag stocks up as well.
Look at the blue bars there on the far right of the left hand slide. Those are future earnings projections right now; as of September, the consensus of what earnings are gonna do in the next three years. How about that?
You know, this has been a really rough year in the markets, and I have a lot of people coming to me and asking, “Is it ever going to end? You know, it’s nine months we’ve been dealing with this.”
Look at April of 2020; you see a blue dot there, right? The pandemic was just starting. We all thought the world was gonna end, and then boom, what happens afterward? The stock market shoots up 43%.
Another example is November of 2008. This is the financial crisis. The banks are getting bailed out. Like, I barely remember this now, but it was a big deal back then.
Everyone thought, you know, we were all going down. Boom. The markets go up 22% over the next year.
Every time consumer sentiment was at a peak, the market’s faltered afterward. And so what this tells me is one. You know, we are at an all-time low in consumer sentiment, so if history is any indication of the future, we can, you know, reasonably expect that things will start to get better really soon.
You cannot trust your own emotions when it comes to investing. So if you’re thinking, you know, the world is about to fall out from under you right now, it’s probably not. Yep. If the motion emotions are like a, you should think of them as a contra indicator; whatever you’re feeling right now, that means you should do the opposite because investing, that’s how it.
Just be patient and hold on. The returns are gonna be there; they’ve always been there in the past, and, and judging by the past, we can say that they are going to return.
If you wanna talk, please give us a call at 925.573.6410.
That said, you know, we both feel your psychic pain. You know, I’ve been through this for 35 years. Angela’s been doing it for 20-plus years. We are confident. Everything’s gonna get better.
But we also know that most people are dealing with, what they see in the press and in the news, and you know, what their friends are saying. And there’s just a big sense of bloom and doom right now. It really hurts. That’s the worst part about this job, I think Angela will agree, is just knowing that you, you are hurting right now, and there’s nothing really we can do to change it except make realize and remind you that things are gonna be fine.
Don’t worry; we’ll get through this.
We highly encourage you to keep the news off. There are all kinds of crazy stuff in the news right now about what’s going on in the markets. It’s supposed to be a really beautiful weekend. We wish you all a great one. We hope you have some time to get outside and, That’s probably the last of our really beautiful weather.
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