In today\u2019s Steady Investor, we look at key factors that we believe are currently impacting the market and what could be next for the markets such as:<\/p>\n\n\n\n
Life Expectancy Falls, But Investors Should Still Plan Conservatively \u2013 <\/strong>Since the 1920s, life expectancy in the U.S. has been steadily on the rise. Innovation in medicine, a building up of healthcare infrastructure, access to the medical system, and stronger public health messaging and information have all contributed to lower mortality rates. But that progress ran into some speed bumps over the past couple of years. In 2020, a major culprit to falling life expectancy was of course Covid-19. But that trend continued last year, with life expectancy dropping by 0.9 year to an average of 76.1 years. That was a slightly smaller drop than 2020\u2019s 1.8-year decrease, but the two consecutive declines mark the biggest drop since the 1920s. In our view, the pandemic and associated restrictions drove these decreases, but the overall trend upward should continue as the world moves on. We still encourage clients to plan conservatively when estimating life expectancy, to ensure that an investment portfolio can provide cash flow needs well beyond a lifetime. According to the Social Security Administration, a man turning 65 in 2022 can expect to live another 20 years, and a woman turning 65 this year is expected to live even longer \u2013 22 years. When running cash flow analyses under various market scenarios to see how a portfolio is affected by different levels of withdrawals, inflation rates, and fluctuating market returns, we stress to clients to be conservative about life expectancy \u2013 planning to live to age 100 is better than just planning the next 22 years.1<\/sup><\/p>\n\n\n\n ____________________________________________________________________________<\/p>\n\n\n\n Tips On How to Survive Extreme Market Volatility<\/u><\/strong> ____________________________________________________________________________<\/p>\n\n\n\n The Fed\u2019s Jackson Hole \u201cRetreat\u201d \u2013 <\/strong>The annual getaway for global central bankers in Jackson Hole had a double meaning this year: it was a retreat for the Fed, which also spurred a retreat in stock prices. At issue was an 8-minute speech given by Federal Reserve Chairman Jerome Powell, in which he reiterated the Fed\u2019s hawkish approach to inflation. The market appeared to be put off by his apparent tilt further into hawkish territory, perhaps in stating the central bank would maintain \u201ca restrictive policy stance for some time.\u201d Market consternation was also apparently tied to his statement that the Fed would \u201ckeep at [rate hikes and tightening] until we are confident the job is done.\u201d In our view, Powell\u2019s comments were a repeat of what the Fed has been saying for months, but the market sold off sharply anyway. The market had been pricing-in rate cuts by summer of 2023, but Powell\u2019s comments in Jackson Hole were taken as a clear sign the Fed would likely keep tightening even if the economy entered a recession, much like the Volcker Fed did in the 1980s to fight inflation. Post-Volcker, bond traders have come to expect that the Fed would rush to cut rates and loosen monetary policy any time the economy showed a hint of weakening, which is often referred to as the \u201cFed put.\u201d Chairman Powell seemed to be putting that assumption to rest, and stocks have been choppy since.3<\/sup><\/p>\n\n\n\n What\u2019s Driving the Oil Rout? \u2013 <\/strong>Oil prices have been in a sustained decline over the past several weeks, with this week posting an over 10% decline in just three days. Sources of the rout are tied to supply and demand, with many arguing that the expectation of plummeting demand \u2013 tied to a major global economic slowdown \u2013 is driving the weakness. But that\u2019s only half the story, and the insistence that the global economy is headed for a sharp slowdown and dragging oil prices in the process is a bit overblown. There is also a stabilization in global supply, with OPEC raising production targets and the U.S. seeing an increase in rig count. Russia has also been a key player in stabilizing oil markets, despite the West\u2019s attempts to curtail Russian exports with sanctions and oil bans. Russia is pumping just as much oil as before the war, and has been diverting exports away from Europe and the U.S. and towards Southeast Asia. A reminder that oil markets are not only global, but also fungible.4<\/sup><\/p>\n\n\n\n Eyeing China\u2019s Economic Slump \u2013 <\/strong>China\u2019s economy is in a notable slump, with data in everything from factory activity, consumer spending, and housing all in decline. The worst heat wave in 60+ years, a drought, and ongoing Covid-19 restrictions have all served as stiff headwinds to China\u2019s economic growth. The heat wave and drought have led to electricity shortages which have curtailed manufacturing activity, with the purchasing managers index still below 50. Property developers in China are also reporting a plunge in activity, with sales off more than 30% compared to August 2021. One bright spot has been activity in the services sector, which now makes up 53% of China\u2019s economy. China\u2019s nonmanufacturing purchasing index posted a reading of 52.6 in August, hanging in expansionary territory.5<\/sup><\/p>\n\n\n\n Prepare for Market Downturns<\/strong> \u2013 We\u2019ve all witnessed how quickly the stock market can change. That\u2019s why it is important for investors to understand how bear and bull markets work.<\/p>\n\n\n\n
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History shows that when the market plunges, it bounces back, but that doesn\u2019t make dealing with volatility any easier. During this time of extreme volatility, it is important for investors to understand the fundamentals of both bull and bear markets and how to stay on top of their investments during turbulent times.<\/p>\n\n\n\n
So, to better understand market downturns and steps you can take to protect your assets during the next bear market, you\u2019re invited to get our free guide –\u00a0Everything You Need to Know About Bear Markets<\/em>.2<\/sup>
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If you have $500,000 or more to invest, get this helpful guide today. It walks through the history and types of bear markets, how investors typically react to extreme volatility, and what we can learn from the history of bear markets and pandemics.
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Download –\u00a0<\/a><\/u><\/strong>Everything You Need to Know About Bear Markets2<\/sup><\/u><\/a><\/strong><\/em><\/p>\n\n\n\n