Depressing Expansion — Normally, you would think stocks rise during a period of economic expansion and fall during periods of contraction. However, since the pandemic began, the opposite has been true.
As the economy faltered to one of the worst years on record in 2020, equity prices soared, yet ever since things took a turn for the best in late 2021, stock prices have cratered. Pardon my French, but what the f*ck is going on?
Well, for starters, it’s not limited to stocks. Flying in the face of all recent data we’ve seen, Americans, in general, are super bearish on the overall economy. This kinda makes sense. However, there’s one thing we will always be bullish on, and that’s pizza. This robotic pizzeria with over half a billion dollars in commercial contracts is clear evidence.
See, there’s a difference between how normal people experience the economy to how pale-skinned, nerdy economists experience it. For consumers, inflation is the name of the game, particularly in things like gas prices, energy bills, and grocery store tags. And I don’t have to tell you loyal Daily Peel readers that that’s where inflation has been hurting the most.
In fact, consumers are so bummed about the economy that confidence levels are below even where they were throughout the entire pandemic. According to WSJ, the average person hasn’t felt this bad about the economy since the years immediately following the GFC.
Wage gains, elevated stock prices, and businesses literally begging on their hands and knees to hire people can’t overcome the misery induced by rising prices. Moreover, heating tensions in eastern Europe likely won’t help cheer up consumers anytime soon. If you ask me, the economy needs a rest day… for our mental health.
Act Correct In a Correction — The S&P 500 is officially in correction territory. Both the Nasdaq composite and Russell 2000 are also in correction territory and have been for a while. The Dow is chilling for now, but with only 30 stocks to its name, who the hell cares, right? Anyway, let’s talk about what history says about corrections.
For starters, there will be no shortage of journalists, Twitter freaks, and Jim Cramer-esque talking heads on TV absolutely sh*tting their pants over this. Yeah, someone get these guys and gals a beer… time to chill out for a bit. Let’s look at some stats.
According to Barron’s, this is the 33rd correction since 1980, and when corrections occur, stocks generally find themselves higher one year following, with the average return in that period being 25%. Markets get jittery, but it’s times like these that the apes are separated from the (almost) humans.
Here’s some advice, financial or not; don’t do anything stupid.
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