8 Reasons to Remain Positive about the Stock Market, Ep #204

The first two quarters of 2022 were horrible in the stock market. The third quarter started well, but the last three-and-a-half weeks have not been great. One of my partners at Fortress Planning Group wrote an article about inflation, the Fed, and the midterm elections. In this episode of Best in Wealth, I am going to highlight some of Brian’s key points. My end goal is to encourage you to remain hopeful about the economy. [bctt tweet="In this episode of Best in Wealth, I share 8 reasons to stay positive about the stock market. Check it out! #wealth #retirement #investing #PersonalFinance #FinancialPlanning #RetirementPlanning #WealthManagement" username=""] Outline of This Episode [1:10] The positive impact of routines [2:45] Inflation, the Fed, and midterm elections [7:40] 8 reasons to have a positive outlook [10:17] The impact of midterm elections on the stock market [12:49] Discipline is the key to successful investing Inflation, the Fed, and midterm elections On August 26th, Jerome Powell told investors that the Fed is committed to raising rates to fight inflation until it gets the job done. The stock market has steadily declined ever since. However, Brian points out that September is traditionally a weak month in the market. The upcoming midterm elections also leave people fearful. Why? The Fed is getting aggressive with interest rates. Their end goal is to return inflation down toward the 2% range, or a “neutral rate of inflation.” In the 12–15 years before 2021, we averaged 2% inflation. The labor markets are still tight and economic slowing is needed. Europe is about to enter a recession. China is still implementing its zero-Covid policy, impacting supply chains. Russia is causing problems with global energy supplies. Add all of this up and we likely see little upside in stocks. [bctt tweet="What do inflation, the Fed, and midterm elections have in common? Find out in this episode of the Best in Wealth podcast! #wealth #retirement #investing #PersonalFinance #FinancialPlanning #RetirementPlanning #WealthManagement" username=""] 8 reasons to remain positive about the stock market I believe we can have hope. Here is why. Leading indicators continue to point to deviation/disinflation. Over 40% of the components that make up the consumer price index have declined from their recent highs. US corporations remain impressively resilient, emerging from the global pandemic efficiently, with better cost discipline. They are weathering the inflation surge impressively. The US economy has absorbed the massive Fed rates. Labor issues are improving, evidenced by last month's job reports showing an increase in participation rates. Investor sentiment remains near rock bottom, worse than the great financial crisis. Why is that good news? When it is low, it is a sign of the bottom. There has been a drop in energy, housing, and commodity markets which supports a lower inflation outlook. We were supposed to hit $140 per barrel of oil this summer. Currently, oil sits at $86 a barrel—far below the Russia/Ukraine crisis levels. Oil was higher when the war with Ukraine started. ISM manufacturing prices paid index fell to the lowest levels of the year, in line with pre-pandemic figures. These 8 positive signs show us that we can see positive outcomes in the remainder of 2022. This is all good news for investors and the mainstream media is not pointing it out. The impact of midterm elections on the stock market We cannot forget about the role of elections. The midterms are Tuesday, November 8th. Historically, in the 12 months before election day, market performance has been muted at best and is generally volatile. But in the year after midterms, the S&P 500 sees market...