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May 16, 2022

Despite significant market declines eroding portfolio values seemingly regardless of allocation (stocks, bonds, and even crypto are all simultaneously at or near bear market territory), this week, Phil attempts to calm investors – particularly those heading for the exit. The last decade or more has been one heck of a run, but the exceptionally easy financial conditions and historically low interest rates that helped fuel the longest bull market in history are now a thing of the past. In the 91 trading days since marking an all-time high, the S&P 500 has collapsed 15.7%, inflation hit 40-year highs, and the Fed raised interest rates 75 basis points… how can investors withstand this type of environment? Phil provides a few simple suggestions, but importantly points out that due to the rate reset dramatically repricing stocks across major indices, much of the market is beginning to look attractive on a valuation basis. 12-month forward PE ratios have declined below historical averages, and even the yield curve appears fairly valued. Of course, China’s struggle with Covid amidst slowing growth, potential recession in Europe, and stubbornly high inflation all loom in the macro background. Can companies earn their way to better stock performance? Can the consumer outspend the rate of inflation? Listen in to find out.