Today, I'll give you a quick rundown of what's going on in the financial and economic worlds.
(There's also a discussion of the quest for beauty in the mundane.)
Stocks seem to be caught in a volatile pattern according to Q1 earnings. A potentially more serious concern: a number of economists believe a recession is on the horizon. According to the International Monetary Fund's most recent forecast, Russia's invasion of Ukraine reduced global growth this year. Fannie Mae anticipates slower growth for the rest 2022 and a recession in 2023. When multiple forecasts begin to point in the same general direction, pay attention. So, what are we going to do with that data right now? Do we freak out and panic? Should we abandon our investment strategies in order to avoid losses? Nope.
We'll have to wait and see. We polish our tools. We seek out new opportunities. It's natural to be concerned when markets are volatile, but hasty decisions can be costly. "Predictions are difficult, especially about the future," says an old proverb of disputed origin. Forecasts are almost always wrong in some way, and relying too heavily on what "might" happen is a recipe for disaster. So we keep our eyes open, our wits about us, and go about our daily lives as usual.
We should not act as if a recession (or bear market) is unavoidable.
Bottom line: I'm watching and digesting the analysis as it comes in, and I'll be in touch as needed with recommendations. Have any concerns or questions? Make contact. P.S. Interesting fact: did you know there's a theory of the stock market called the "Keynes beauty contest"? In the 1930s, famed British economist John Maynard Keynes was searching for a way to explain short-term stock market movements and theorized that it was similar to a newspaper contest choosing the most beautiful face.
To win the contest, readers had to choose the face that was the most popular choice among all contestants, meaning they had to guess what others would find attractive. Keynes compared this to how stock prices seemed to change not based on their fundamental value, but by anticipating what everyone else thought their value was (and what others anticipated the average investor opinion would be, and so on). Sincerely,
Paavan Kotini, CEO & Principal Advisor Kotini & Kotini https://kotiniandkotini.com (804) 372-8307
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