Hello Again - The stock market has come a long way in a short period of time. Since mid-June it has recovered approximately 60% of the decline that happened in the first part of the year. So what’s the outlook now? There’s two general scenarios.
Scenario 1, inflation starts to recede, the Fed starts to slow it’s interest rate hikes in the near future, the economy experiences a soft landing and stocks keep trending higher from here. That’s the good scenario.
Scenario #2, inflations stays stubbornly high, the fed has to keep raising rates rapidly to get it under control, and the economy slides into a bad recession. In this case stocks probably rollover again and head back toward the lows and maybe lower. That’s the bad scenario.
Lately the stock market has been leaning more toward the good scenario than the bad one. But of course that could change, we simply do not know at this point. Upcoming inflation reports and next steps by the fed will tell us more. You know what I think, I lean more toward scenario #1, because I feel we are still in the early stages of a new bull market that started at the covid lows back in spring 2000, and that 1,2,3,4,5 years from now stocks will be higher than where they are now. That’s just me. I could be wrong. But, the S&P 500 bumped up against its downtrend yesterday (see chart below). If it can get above that line and stay there, then that will be another indication that the worm has turned from down to up. Again, we’ll just have to wait and see what develops.
On another note, it’s time to start talking about your 2022 RMDs, or required minimum distributions from your IRAs. If you are at least 72 years young, then each year you are required to take out a certain amount to satisfy the IRS. Its called a distribution from your IRA and it becomes taxable income. You don’t necessarily have to take it out and put it in the bank, a lot of people simply take it from the IRA and move it to their non-ira account and reinvest it. Another tactic is to gift it to a qualified charitable organization and then it is no longer considered taxable income. The key there is that the check has to be made out to the charity. We can help with this and will be reaching out to everyone this fall regarding the RMD.
Best Regards,
Mike
S&P 500 Daily Chart Since Covid (The S&P 500 is a stock index representing 500 of the largest public companies in America)
