Current news headlines indicate that we are in a bear market. So, today, we are taking a deeper dive into key factors that we believe are impacting this bear market and what’s to come, such as:
Americans are Buying Less Gasoline – The sting of higher gas prices is starting to hit U.S. consumers. As the average national price continues to hover around $5 a gallon, consumers are showing signs of shifting behavior and filling up less. In the first week of June, the energy-data provider OPIS reported that sales at U.S. gas stations were down 8.2% compared to a year ago. The Energy Information Administration also reported that by mid-June, an estimate of gas products supplied to consumers have fallen approximately 110,000 barrels a day to about 9.1 million barrels a day. That’s also down from 9.4 million barrels a day from a year ago. Consumers are rethinking road trips, utilizing carpooling and mass transit more, and this has been increasingly the case in the past couple of years, working from home more often.1
Should You Time the Current Market?
In today’s market, rising inflation is causing recession risks to grow stronger. As are result, many investors are making decisions based on fear.
Investors often fall into the trap of trying to buy “at just the right time,” or selling stocks during a crisis when emotions are running high. To better help you avoid acting off emotions and fear, try downloading our guide, “How Market Timing Can Affect Your Retirement Plan2”. This guide explains these behavioral traps and offers potential solutions.
If you have $500,000 or more to invest and want to learn how you may be able to avoid these mistakes today, click on the link below to get your free copy:
Download Zacks Guide, “How Market Timing Can Affect Your Retirement Plan.”2
Is a Federal Gas Tax Holiday Coming? – President Biden decided last week to call for a 3-month suspension of federal gasoline and diesel taxes. While this move appears on the surface as though it could provide temporary relief for higher gas prices, the economic reality is likely far less significant. By the numbers, the federal tax on gas is 18.4 cents a gallon with 24.4 cents a gallon federal tax on diesel fuel. Even if the suspension of the gas tax was fully absorbed by consumers, it would only amount to about a 3.5% discount on price – not necessarily a game-changer. But it’s also true that oil companies could benefit from the gas tax suspension, which would mean the savings are not all passed along to consumers. That would make the discount even more negligible. At the end of the day, oil and gas prices are set by supply and demand in global markets, which gives Congress and the president little power to influence prices. It may not matter anyway – the measure requires Congressional approval, and there does not appear to be enough support to pass a bill.3
Median Home Prices Hit Another Record – The month of May was yet another record-setting one for U.S. home prices. For the first time in the nation’s history, the median price for a home topped $400,000, as the supply and demand imbalance in the marketplace continues to favor homeowners and sellers. May’s median home price increase tallied at 14.8% from a year ago, a remarkable increase that has characterized the past two years. Demand has continued to push higher as millennials, who are also overwhelmingly first-time homebuyers, leave cities in favor of owning homes with space for home office setups. We do not expect this pace of price increases to last very much longer, however, as mortgage rates continue to climb and high prices discourage would-be homebuyers from entering or staying in the market. We also believe the likelihood of a 2008-like bubble in housing is low – there doesn’t appear to be enough inventory in the market for a bubble. What’s more, lending standards have tightened considerably since the housing crisis, and household finances are currently in good shape within a strong labor market.4
Should You Time This Market? If you’re questioning the right financial moves to make as you navigate through this current market, remember not to fall into the trap of trying to buy “at just the right time,” or sell stocks during a crisis out of fear.
Both of these impulses are likely to lead to more failures than successes over time. Even when emotions are running high, we recommend focusing on the long-term view and sticking to your course.
Before making any big decisions, check out our guide, “How Market Timing Can Affect Your Retirement Plan.”5 This guide seeks to explain emotional and behavioral traps that investors can fall prey to and offers potential solutions to common mistakes that many self-managed investors make. If you have $500,000 or more to invest and want to learn how you may be able to avoid these mistakes today, click on the link below to get your free copy: