Q3 Wasn't Good But It Could've Been Worse

A week out from Hurricane Ian and the end of the third quarter on Wall St.

I’m not sure which hit us hardest. For the folks of Southwest Florida, the answer is clear. Homes and businesses were lost, and in some cases, lives.

How their investment portfolio did last quarter is the least of their worries.

For my folks in the Tampa Bay Area, spared the worst of Hurricane Ian thanks to an easterly turn, the blow to their investment portfolio can feel like they’ve still been hit by a nasty storm.

Thanks to the Federal Reserve raising interest rates to fend off inflation, the gauges closed out the worst first 9-months of a year since 2002.

Here’s your year-to-date box score.

The Dow…off 21% in 2022.

The broader market, as measured by the S&P 500 down nearly 25% year to date.

And the technology-heavy NASDAQ index off by 32%.

Fear seems to be driving the fall. Fear that rising rates will hurt the economy and hamper corporate expansion and profits, leading to lower stock prices.

At some point, the fear will ease, the herd will turn, and sanity will be restored. Folks will realize that the best-managed, best-financed, and most innovative companies in the world will find ways to be profitable, just like they historically have.

And then the fearful will decide they want to be owners of those companies again. Once the stock prices have risen, they can complete their selling low and buying high roundtrip. Just the opposite of what Grandpa taught them.

We’re not the fearful nor the followers. We don’t know when the turnaround will come. We just know it will. And we don’t want to miss it sitting on the sidelines. 

When will they come back? No one really knows. But come back, they will. And I suspect a couple years out, when the market has resumed its upward trend line, we’ll have long forgotten the summer of 2022.