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Understanding the Present

April 19, 2022

We all know markets were down in the first quarter of this year. We started the second quarter right where we left off in the first quarter. The two charts below show an array of indexes across two separate time frames: 1) The first chart shows the markets for April so far. 2) The second charts shows the year-to-date returns.

When observing such charts, the decline seems obvious IN RETROSPECT. But the question is, how obvious is it as it is happening? To help answer this question, the first thing I would ask you to do is to trace the lines from the left to the right and imagine where each might be going next. Follow the path of the NASDAQ (the orange line). Pay particular attention to its rally from its March low. Many commentators were pronouncing the correction over by the end of March. Then April happened.

Here is some data to consider: so far in 2022 there have been 72 trading days. Over these 72 trading days, the S&P has been up 38 days and down 34 days. The average amount the market moved up on these 38 up days was 99 basis points. Conversely, the average amount the market moved down on these 34 down days was 103 basis points. Overall, the S&P was down by 8 basis points per day. (For context the NASDAQ was down about 20 basis points per day.) The point in reviewing all this data is to emphasize that NOTHING IS OBVIOUS AS IT IS HAPPENING. Walking through the daily market experience, we cannot really know what direction things are heading. We also don’t know when the market will shift to the next regime.

What are investors to do? We continue to emphasize that the best thing is to periodically review your circumstances, objectives and risk tolerance with your investment advisor and adjust accordingly. Over the long-term, markets tend to follow a pattern that experts call “a random walk around an upward drift.” This upward drift is the source of return that all market participants are harnessing as a means for building wealth. This long-term drift also includes more challenging markets like the one we are currently experiencing. Please contact your advisor if you would like more information. We appreciate your business very much.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which Investment(s) may be appropriate for you, consult your financial advisor prior to investing. Information is based on sources believed to be reliable, however, their accuracy or completeness cannot be guaranteed. No investment strategy can assure success or completely protect against loss, given the inherent volatility of all securities markets. Statements of forecast and trends are for informational purposes and are not guaranteed to occur in the future. All performance referenced is historical and is no guarantee of future results. Securities investing involves risk, including loss of principal. An investor cannot invest directly in an index.  
Advisory services offered through WealthPlan Investment Management, a subsidiary Registered Investment Advisor of WealthPlan Group, LLC.